“As an accountant, how can I help keep local patients local?”
This is a question I routinely ask myself. It can be difficult to know how your actions can possibly impact a patient in a critical access hospital thousands of miles from your desk. While it may not be as apparent as a central line placement or endotracheal intubation, one of the greatest acts we take is safeguarding the company’s assets. A robust network of internal controls is vital to any organization, and the stakeholders are many in healthcare. I believe these are the top 5 internal control initiatives to take within a healthcare organization:
- Segregation of Duties
No single person in the organization should have complete control of every portion of an accounting process. While it may be more difficult to establish the strict segregation of duty controls a larger company can, it’s important to find as many ways to separate tasks as possible. This includes rotating tasks, establishing approval roles, and separating the custody of assets.
- Restrict Access
Restricting access to accounting systems, data warehouses, software, and physical assets helps to ensure the risk of fraud or theft is low by excluding employees that don’t need access to the assets in the first place.
- Routine Reconciliations
Monthly bank and account reconciliations are a must. Reconciliations confirm the balances within the company’s General Ledger tie to the balances in independent accounts. This detective control helps identify any potential theft, fraud, or misstatement.
- Training
It’s important to train employees in the company’s policies and procedures. Employees need to know why the policy was established and how they can help to ensure they’re followed. Training helps employees understand the risks and teaches them how to be on the lookout for bad actors.
- Internal and External Audits
While an external audit is never fun, it is a great time to bolster the organization’s policies, procedures, and internal controls. Using the external auditor as a partner, instead of an enemy, can be very useful. Since you’re already spending the time and money, you might as well use it as a growing opportunity. You can use the same tactics the external auditors use to perform your own internal audits. Periodic internal audits are great ways to detect any areas of risk or gaps in internal controls.
Building and maintaining a strong system of internal controls is of great importance within a healthcare organization; a patient’s life thousands of miles away depends on it.
Blog Author: Christopher M. Dick, RPG – Vice President of Finance