Accounting Software for Home Healthcare Catches Thieves – Don’t Be Without It
Accounting software for home healthcare could have saved a lot of heartache (and losses) for one home health care agency.
A story in Home Care Daily provides the shocking details. A home health care worker embezzled more than $68,000 from an agency—with a little help from his friend. His girlfriend, who oversaw accounting and payroll, continued to make deposits into his account from the company even though he was incarcerated and not working for the agency. Together, the couple siphoned funds away from the agency and into their personal bank accounts over a period of 10 months.
How did they get away with it? How were they caught? Here are a few guesses as to how they got away with it, and an observation of how accounting software for home health care agencies could potentially catch thieves in similar situations.
The Importance of Internal Controls
A major red flag in this particular story is the healthcare worker was dating the bookkeeper. The oversight that is usually there through a separation of duties was breached by the relationship between the bookkeeper and employee.
Internal controls, or the set of rules guiding the conduct around the handling of financial information and money within a company, has the potential of preventing embezzlement and theft.
SCORE, the mentorship group for small businesses, recommends 17 internal controls to establish in your business to prevent theft. Among the 17, ten stand out as the best to implement in a home health care agency to avoid a repeat situation of the one reported in Home Care Daily.
- Conduct background checks before hiring: It’s not the smartest thing to allow someone with a criminal record to work with the elderly and vulnerable at a home health care agency. A background check can turn up items like criminal records or financial problems that put people at risk for theft.
- Separate roles: The person who handles petty cash should not be responsible for entering data into accounting software for home health care. Separate the duties among different people so one person is not responsible for accounting for the money as well as distributing it.
- Check reports: Accounting software for home health care provides detailed reports such as cash flow projects, profit and loss statements, and other financial overviews. By checking reports monthly, you may be able to spot any noticeable discrepancies or sudden differences between projected and actual that can signal a problem.
- Reconcile bank statements promptly: Prompt reconciliation of banking and credit card statements at the end of each month enables you to check any unusual charges or withdrawals. Even if your accountant or bookkeeper enters the data, it’s a good idea to review it.
- Set up an inventory control system: If your home health agency provides any medical equipment or supplies to its workers, set up an inventory control system to formally check items into and out of inventory. Even something as small as a stolen box of protective gloves or rolls of adhesive tape can be costly if repeated multiple times.
- Review payroll yourself: Your bookkeeper or accountant may generate the payroll, but you should be the one to check it before it is released. If the owner of the home health agency in the story reported in Home Care Daily had checked payroll, he would have seen payments going to the person who was incarcerated—clearly, that individual was not performing home healthcare duties while he was in jail. The owner would have seen and spotted the theft almost immediately.
- Sign the checks yourself, too: Checks should require your review and approval or sole signatory responsibility. If two or more people in your organization sign checks, make sure you, as the owner, approve all checks before they are issued.
- Require vendors to submit detailed estimates and invoices: Another way in which fraud takes place is by “ghost” or faux vendors who submit receipts. The embezzler pays themselves through the fraudulent vendor name. To prevent this, ask any new vendors to complete new vendor paperwork and to provide detailed estimates and scope of work before they are approved as a vendor. Check all invoices against the estimates and flag any significant discrepancies for investigation.
- Spread responsibilities: Do not put all financial duties into the hands of one employee. Initiate a series of checks and balances so various employees are responsible for handling financial duties. Or, if your home health care agency is new or small, share the duties with one person, but stay hands-on.
- Conduct random checks: Random checks on financial statements, bank accounts, and petty cash let potential thieves know you’re serious about preventing theft. It also keeps them on their toes and closes windows of opportunity for them to steal.
Accounting Software for Home Health Agencies Helps Prevent Theft
Accounting software for home health agencies can help you prevent theft. Reports are easier to generate, so you can see any discrepancies at a glance. You can limit who has access to bank accounts, statements, and credit lines through the accounting software, so you can control access. Perhaps even more important, accounting software gives you a clear view of all the financial information in your company, so you can take prompt action to investigate any irregularities.
Interested in learning more about automating accounting for home healthcare organizations? Check out our Guide to Choosing Home Health Accounting Software.
Running a home healthcare agency requires smart business sense as well as compassion for the people you serve. Make sure that internal controls are part of your financial savvy to prevent embezzlement and theft. When you are ready for home health agency accounting software, please call Mindover Software. Contact us or call 512-990-3994