Article Date: 5/1/2008

Five Causes of Embezzlement

Five Causes of Embezzlement

Here, I identify the most common forms of office embezzlement, and offer practical solutions.

RICHARD KATTOUF, O.D., D.O.S, Greenville, S.C.

As practice owners, it's difficult yet critical to keep a pulse on staff behavior and finances, as you don't want to lose valuable income. Through performing consulting and management services for more than 20 years on more than a thousand practices, I've discovered that many have allowed their staff to control the business aspects of their practice. This is a formula for embezzlement. The major causes with some solutions are as follows.

1. Doctor/owner loses pulse on computer software

It's imperative that both you and your staff understand software-system updates or new software. I've discovered, however, that often, the staff alone understands the new technology. This is because your "busy" schedule has "prevented" you from learning how to enter the system and determine payments, credits and charges. In this case, employees almost always embezzle money and/or products.

SOLUTION: Make the time to contact the software company, so you can gain the necessary knowledge to play gatekeeper. And, let your staff know that you possess this knowledge, so they'll be less likely to embezzle.

2. Doctor/owner not establishing boundaries on phone use

If your employee possesses her cell phone at work, she will use it. Text messaging at work is the newest form of embezzlement. Unauthorized phone use and text messaging embezzles time for which you're paying staff.

SOLUTION: Simply put, the only way to prevent this form of embezzlement is to set a rule that staff cannot bring their cell phones to work. But, ensure them that they may use the practice phone to contact family members in the event of an emergency and that family members may call the practice in this case as well. This reassures staff that they do have a lifeline to the outside world, while educating them that you don't condone using the practice's phone for personal use either. Appoint a reliable staff member to detect and prevent this behavior.

3. Doctors/owners not setting boundaries on Internet use

Using the Internet for shopping or other personal issues during work hours is another form of time embezzlement.

SOLUTION: Install software "blockers" to prevent this action.

4. Doctor/owner allow staff to order spectacle prescriptions and frames from vendors of their choice

It's critical you direct your optician to order a particular frame brand from a particular laboratory for these three reasons:

(1) Many opticians develop close relationships with lab and frame representatives (reps). Many of these reps give perks — which belong to the owner — directly to the optician. The employee often receives these perks at her home.

(2) Many opticians over purchase frames as a result of pressure from frame reps and you not setting a budget or signing off before all orders.

(3) Many opticians sell products for cash to friends and patients at a low cost, pocketing the money.

SOLUTION: Occasionally open boxes and trace invoices to patients to determine any such behavior.

5. Employees stealing money

I've discovered that numerous staff have traced doctors signatures from a letter or other document to forge the signature into a check and cash it.

SOLUTION: Don't allow staff to open mail. Also, don't allow the same employee to collect the money, balance the day sheet and cash drawer. When staffers know that you have no handle on daily mail and receipts, many will steal from you. So, take a few minutes, as part of a closing procedural check list, to evaluate the day sheet. Ask questions, and be the financial gatekeeper. This is your practice/business, you must control it.

You must exhibit a high degree of awareness and check and balance systems to prevent staff from embezzling money/and or products from you. Unfortunately, through my consulting and managing services, I've seen many practices that don't exhibit structure, organization and consequences to negative behavior. It's your obligation to maintain a pulse on your business. OM

Dr. Kattouf is president and founder of two management and consulting companies. For information, call (800) 745-EYES, or e-mail Dr. Kattouf at

Optometric Management, Issue: May 2008