Proper internal control procedures can reduce theft and fraud in your office.

Internal controls can be divided into the following three main categories:
1. Separation of duties;
2. Supervisory controls;
3. General controls;

I. Separation of Duties
Duties should be divided so that no one person has complete control over a key function or activity. Where feasible, implement the following:
a) Different persons should be responsible for
(1) billing and maintaining accounts receivable records,
(2) receiving or handling incoming payments, and
(3) reconciling receivable records to the bookkeeping records.
b) Different individuals should be responsible for
(1) ordering supplies,
(2) receiving supplies,
(3) matching supplier invoices and packing slips, and
(4) paying supplier invoices.
Where it is not possible to separate duties, you should consider implementing supervisory and general controls. Even where duties have been separated, adding these controls can offer an extra degree of protection.

II. Supervisory Controls
Supervisory duties should be entrusted to reliable individuals, such as your spouse or key employee. The supervisor should perform the following tasks:
1. Before signing cheques, review all necessary supporting documents, (i.e., matching invoices to packing slips/receiving reports). Receipt of supplies should be verified prior to approving invoices for payment.
2. In order to prevent the same invoice from being paid twice, stamp all paid invoices “paid” and record the cheque number on the invoice.
3. Review your cheque register periodically to look for cheques paid to unusual suppliers or individuals.
4. Review bank reconciliation on a monthly basis, examining reconciling items to ensure that the transactions were properly processed and approved.
5. Approve petty cash reimbursements only after reviewing supporting documents.
6. Reconcile and review daily deposits with cash balancing sheets on a spot-check basis.
7. Secure and count petty cash periodically and compare with amounts that you should have available.
8. Document policies and procedures to promote employee understanding of job duties and ensure continuity during employee absences or turnover.
9. Review all write-offs and credits to patient accounts on a monthly basis to ensure that each of these transactions has been properly authorized and approved. This will reduce the likelihood that a patient payment is recorded as a write-off when in fact the amount has been stolen.

III. General Controls
1. Establish a petty cash fund that monitors itself. For instance, a petty cash fund of $200 should have at all times, cash, receipts, or combination thereof, totalling a value of $200; To replenish the petty cash fund when it is low (i.e., when it is comprised of mainly receipts), see Item 5 of Supervisory Controls;
2. Protect cheques by implementing these controls;
3. Pre-number cheques;
4. Store cheques in a locked place;
5. Keep all voided cheques and cut out signature area.

A system of controls is only as effective as those who implement and adhere to them. Internal controls should be continually monitored to ensure that the quality and practicality of the system is maintained.