Daniel: Welcome to “The Future Adjustment,” Chiropractic Economics’ podcast series on what’s new and notable in the world of chiropractic. I’m Daniel Sosnoski, the editor-in-chief of chiropractic economics. And our guest today is Tiffany Couch, the founder and CEO of Acuity Forensics. She’s a certified public accountant, certified in financial forensics, and is a certified fraud examiner.
And she’s nationally recognized speaker on the topic of financial fraud and forensic accounting. And she’s here to help you understand how to protect yourself and your practice from theft and fraud. Welcome to “The Future Adjustment,” Tiffany. I’ve read a number of your articles including your most recent ad, CPA practice advisor. And so I suppose it’s safe to say that you’re the type of expert most doctors would like to avoid meeting.
Tiffany: I actually am. Thanks for having me on. And like I said, I’d much rather have our doctor friends learn how not to have to meet me.
Daniel: Yes. And just to make this very clear to the audience, I get press releases and I get news stories updates every day. And this is a very dangerous risk for chiropractors who often are the victims of fraud or theft in their own practices, whether that’d be from a someone in bookkeeping or a partner. This is not unusual, it does happen. So let’s find out what some of the risks are, and what are some ways that we can go about mitigating them.
Tiffany: That’d be great.
Daniel: Okay. So Tiffany, you have so many examples of businesses that became the victims of fraud. For the doctor of chiropractic with a small to medium size staff, what are some of the most common risks and dangers?
Tiffany: You know, if the doctors focused on two areas, they’re going to reduce their risk of fraud greatly. And those two areas are disbursements, meaning money leaving the practice whether by payroll or just by checks being written or even the debit card or credit cards, understanding that the, A, number one way fraud occurs is through the disbursements process is a huge risk. And the second is the diversion of cash. You know, patients come in, they pay their bill, they pay their copay, insurance companies pay, and understanding that an unscrupulous employee or, like you mentioned, even a partner can divert that cash or that payment before it ever hits the doctor’s bank account is another huge risk in a chiropractic practice.
Daniel: Yes. And I understand that you recently uncovered a really fascinating scheme involving copays, something to do with Square payments in a medical practice?
Tiffany: Yes. So, you know, the diversion of a payment, like, again, from a patient or an insurance company is nothing new and is as old a scheme as a test of time. But with the advent of Square and on these other kinds of software programs or really, hardware and software, right, where we can setup a credit card payment literally through our phone using one small little device in an app that you can download, this unscrupulous employee had patients pay their copays with credit cards, which you would say would go directly to the doctor’s account. But instead, it went to the employee’s bank account because he had set it up so that he could divert those payments to his account instead of the doctor.
And, you know, usually with a merchant account system, you set it up through your bank and it all transact, you know, with your bank and with that machine. With PayPal, and Square, and some of these other programs, you know, it’s actually quite easy to set something up that would divert those payments away to that employee.
Daniel: I know, right? It seems like all of us are starting to move money online more and more over the internet. In this particular case, how could that doctor have prevented this problem or uncovered it more quickly?
Tiffany: Well, the first thing would be to make sure that any payments for the credit card went through that traditional merchant system. But in my professional opinion, this is more of a detection where we really needed to have a better detection method. And in that case, number one would be the simple day sheets, right? Most medical practices have a practice management software that tracks all the payments coming in. And I asked my doctor clients, do you make sure whether it’s daily or weekly that you match those day sheets to the actual deposits to your bank, that would be number one.
Number two, another great method that these employees use is to just write off the amounts or use credits on the patient account. And so I always encourage medical practitioners to look at credits and write offs, and make sure that they make sense for that patient or whether they could be an indication that the money is being diverted and the write offs are being used to sort of hide the fact that the money is missing.
Daniel: Right. If you have a kind of a system with checks and balances setup that as soon as things aren’t balancing, you should get some kind of an alert. You’ve written before that this is the type of crime that can go on for years before being uncovered, especially if the perpetrator is being subtle about it. And indeed, I was reading recently myself about a chiropractor who went bankrupt because it was way too late when he’d learned that he’d lost hundreds of thousands of dollars. And almost none of it was recoverable. Are there safeguards that every doctor should implement?
Tiffany: There are. There are several that are actually really easy to implement. And most of our doctors, they’re great at what they do and they’re so happy to have somebody manage the money if they hand it over. And they literally sometimes walk away handing that over to that trusted person. And so here’s some safeguards. For that doctor who almost went bankrupt and money was not recoverable, the, A, number one thing I want our listeners to know is to call their insurance company and make sure they have six figures, $100,000 or more, of employee dishonesty insurance. It will not raise your premium significantly, but it’s the best way to recoup funds that have been stolen from you because usually, these fraudsters are spending it on, you know, garbage, junk, and it’s not recoverable.
Tiffany: Number two, an easy safeguard. Make sure the bank statement and the canceled check images for your practice are sent directly to you or even your spouse if you don’t want to look at them and look at them. Make sure the deposits are what you expect in terms of incoming revenue. Make sure there’s no funny business going on with the debit card, no unauthorized purchases as an example. And then look at those canceled check images. And make sure that those are all payments that you authorized, and you sign the check, and there aren’t any employee or vendor that you don’t know about.
Doing this on online banking is a nightmare. And so I always say, we’ve got to be a little bit politically correct and not green and pay the extra money to get those statements in paper, because it’s a lot more efficient process to look at. I would also just say that a culture of honesty and making it okay for employees to come to you.
Listen, the person’s feeling is always the employee you trust the most every single time without fail. And so over and over again, what happens, I can think of a surgeon client of mine where everybody knew something wasn’t quite right, but the doctor loved her so much. And I’m not saying it appropriately, right, but really, she was grounded little finger and he trusted her implicitly that the whistleblowers, that the other coworkers didn’t wanna come and say anything to him because they didn’t think they would be believed. And I share that story over and over and over again. So making sure that employees know that they can come to you, even if they perceive that the person doing the bad things are the ones that you, quote, like the best, to the fact that it almost always is that person.
Daniel: Well, that’s a really good tip. It’s funny, you know, you mentioned there being a thing called employee dishonesty insurance. And a lot of the tips that you’re giving us are inexpensive forms of insurance that people can use to protect themselves with. Now, the moment that a doctor does suspect that something funny is going on, what are the immediate first steps that he or she should take?
Tiffany: It’s such a great question. We’ve got a quote on my Twitter feed I think today that says, “You would be surprised how much fraud goes on longer than it needs to because people are so afraid of being polite or, you know, they don’t wanna accuse anybody of doing something wrong.” And so when you suspect, the moment you suspect, please do me a favor, do yourself a favor, call an employee, or excuse me, an employment law attorney and get some advice.
Typically, what can happen is you can put that person on administrative leave. And you probably can do some very simple looking into your bank statement, or those day sheets, or some of these things to find this evidence that things aren’t quite right. You now have a predicate or a reason to put that person on administrative leave. And here’s why, we don’t want that person destroying evidence. We don’t want that person deleting things out of the system, deleting email, that sort of thing.
And then by putting them on administrative leave, you can go through a very simple investigative process that for most practices would be a day or less to just verify whether you really do have a fraud or not. And you remove that person from that role so that you can maintain the integrity of the investigation that needs to happen. And we often don’t think about, it’s the physical access to the document and to the practice, but also email and all of those things that might be on the cloud. We wanna make sure that that person’s access is removed.
Daniel: It’s funny that you mentioned that because I was looking at a news story, local in my city of Jacksonville, Florida where we’re based. And the chief of police had a plea for the citizens. He said that more and more citizens are getting these webcams built into their doorbells, or they have security cameras around their property. And when they spot a crime occurring that, you know, in their driveway or somebody stealing a package off the porch, they tend to take that video and they put it on Facebook, or they send it around. And he said, “Please don’t do that. Let us investigate first because if the criminal is aware that you’re starting to come after them, they can go to ground, or they can start to cover the facts.” The same thing is what you were just saying.
Tiffany: It’s exactly the same thing, right? And that’s human nature, I wanna protect myself so I wanna get rid of the evidence, or I wanna make sure that, you know, this can’t be traced back to me, or what have you. And so, yeah, just removing that access, as difficult as I know it will be, it departs that person so that you can have integrity in the process of looking into this, and it can’t hurt you as well.
Daniel: I had seen in another article about practice fraud prevention that it was recommended that one person not have sole access to bank receipts, or, you know, the payments that are going to the bank, or have one person in charge of receiving and sorting through the mail. Would you concur with that?
Tiffany: Yes. That’s a basic segregation of duties. And even in the smallest of small, you know, offices where you might only have one or maybe two people in the front office, you can absolutely segregate duties and make sure, for example, that the person is doing the billing can’t also take the money to the bank, and that the person handling patient payments can only apply a payment. They can’t do a credit or write-off of a patient account.
You know, in fact, somebody paying your bills then you send somebody else, primarily you, should be looking at that bank statement and canceled checks, and making sure that no unscrupulous payments have been made. So those basic segregation of duties, again, very simple. You pointed this out earlier that at least things are so simple. And I think that’s really what is one of the most heartbreaking part of what I do is that there are very simple safeguards, whether there’s a segregation of duties, or making sure you have the insurance, or making sure you have that proper oversight that makes these things even more heartbreaking and sometimes even embarrassing.
I don’t believe anybody should be embarrassed if this happens to them. But as they are simple schemes and they’re easily uncovered, but folks just don’t know, right? They’re really great at being chiropractors, and they don’t know that these are risks that they need to at least consider and make really small, but effective changes.
Daniel: Yeah. You know, speaking of the word heartbreaking, in a presentation you gave, I heard you make a really salient comment when you said that in addition to the financial impact of being the victim of a fraud or theft, that this type of crime can take an emotional toll on the victim.
Tiffany: Correct. It’s the one part I can’t fix, always have to tell my clients all of these emotions that you’re experiencing are normal. Because here’s the thing, the fraudster is always the one that you trust the most. And so if I trust you, if I have this implicit trust with you, and let’s face it, these fraudsters use their ability to be liked and to be trusted to perpetrate their crime.
And so because of that, the first thing the doctor or the client is dealing with is not the money lost. The first thing they’re dealing with is what is wrong with me that I let this person into my circle, what is wrong with me that I let this happen right under my nose and I didn’t even see it, and they’re dealing with all of those emotions that go along with having your trust breached. And all of us can think of times in our life when somebody we cared about breached our trust. And it’s horrible feeling.
And now, what we’ve got is a professional situation where that’s what we’re dealing with first and all of the emotional fallout from that. And then of course, we can get to…let’s deal with what happened in the money and all of that, but the first thing I always have to deal with is all of that emotional stuff that goes along with these frauds. Because the only way they can happen is if that person has been implicit trust and then implicit access without a lot of oversight.
Daniel: Right. Well, you know, you have a special knack, Tiffany, for taking some of these complex ideas and making them easier to understand. You’ve got a lot of great educational material, and you have a lot of insights on this topic. So for listeners who’d like to learn more about this subject, about you, and your business, where can they go online to learn more about you?
Tiffany: So our website is acuityforensics.com, that’s acuityforensics.com. I’m all over social media on Facebook, and Twitter, and LinkedIn, @TheTiffanyCouch, where we try to give this kind of information. I do really quick snippet videos, write articles, and gives people as much information as possible. And it’s my goal to put this information in the hands of business owners so that they can avoid this kind of thing happening to them.
Daniel: Yeah. I would just mention to the audience that all you have to do is go to Google and type in the name Tiffany Couch and you come right up. All right. Well, hey, thank you so much for spending some time with us today, Tiffany. This has been timely and illuminating. And you’ve given us a forensic look at the future adjustment. I’m Daniel Sosnoski, and we’ll see you next time.