As a medical practitioner, you know it’s important to monitor your revenue and expenses. Yet how carefully are you tracking your billing and coding activity? While lack of time and attention can certainly be the culprit, the onus is on you to ensure the accuracy of your finances.
Mention an audit to any business owner and the IRS usually comes to mind. However, an internal financial audit has nothing to do with the IRS and everything to do with the fiscal health of your medical practice. Here’s why.
- Account for all Receivables
When done correctly, a medical practice internal financial audit can ensure payment for exactly what you billed for and for every service you billed. As part of the audit, you will:
- Compare month-end collections per billing software report to actual money deposited per monthly bank reconciliations
- Review petty cash reconciliations, contractual adjustment posting and access controls to medical billing software
- Review account receivable procedures and related approval of vendor endorsement
- Review payroll procedures including hours worked and logged vacation time
- Establish Consistent Procedures
If you don’t already have a checklist of the procedures you would like staff to follow, the internal audit is a good time to implement a checklist that everyone follows no matter their role. For example: Who is authorized to sign checks? Are invoices available and attached to every check? With a checklist, when you have employee turnover, you can be assured that new employees will get on board with your procedures. If you have a checklist, make sure it is updated to reflect changes you have made in your financial processes.
- Prevent Embezzlement
While no practice owner wants to think about embezzlement at their office(s), an internal audit will confirm that all collected funds are being deposited into your business account. You’ll want to exercise caution in determining who should have access to payments and financial accounts.
Related Blog: Avoid Fraud by Implementing Internal Controls
The Objectivity of Third-Party Audits
If your medical practice simply doesn’t have the resources to conduct a thorough audit on a periodic basis, you may want to hire external accounting professionals to alleviate any issues that may impact the financial well-being of your practice.
The chief advantage of an external financial audit is objectivity. An external auditor may be better suited to spot errors or suggest more efficient procedures. When deciding who to hire, you will want to be sure they have extensive experience in financial accounting and medical office procedures.
Professionals with medical billing audit experience also offer expertise in compliance, and may suggest improvements in policies and procedures to keep you updated with HIPAA and OSHA compliance programs, among others.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.