From David Harris on embezzlement: “Only 19% of discovery was prompted by the planned operation of the dentist’s system of controls (day-end balancing, review of software audit logs, fraud found by the dentist’s accountant etc.). The remaining 81% was discovered by some accidental occurrence (examples include another employee reporting the theft, patients identifying billing discrepancies or an employee working unexplained extra hours).”
The lesson is that technology and long complex check lists can not be counted to discover embezzlement. In fact technology often makes it easier for thieves to steal from us. That does not mean that system controls should be abandoned, it does mean dentists need to be alert to other indicators.
Do not expect your CPA to find problems. Most of the time the embezzler works below the level of profit and loss – balance sheet accounting. The embezzler is manipulating the management software so that everything looks fine to the CPA.
Having said that my CPA did help me discover a dishonest employee before he did much damage.