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The Embezzlement Triangle

The Embezzlement Triangle

7/15/2015 5:45:10 AM   |   Comments: 0   |   Views: 237

Our last blog we discussed the startling fact that over 60% of dentists are victims of in-office embezzlement at some point in their career, and on average, will suffer a loss of over $100,000. Even more disturbing than the probability of being stolen from, is that the thief is usually a longtime, trusted, and intelligent employee—often even a family member or friend. In order for embezzlement to transpire, three key components must exist that create the embezzlement triangle—opportunity, pressure, and rationalization.

Incentive – A person can be enticed to steal by a host of differing reasons, the most common reasons being: 1. Financial (greed, poor credit, hardships); 2. Personal, (ego, feel under valued, dissatisfied with job); or 3. As a result of one’s vices (gambling, alcohol problems, drug addiction).

Rationalization – A person will rationalize their criminal behavior for internal justification of their acts. Common rationalizations include: feeling entitled, organization owes me, practice can afford the loss, and the dentist makes enough money.

Opportunity – A person will identify and capitalize on opportunity to steal, including: lack of theft prevention measures, shared program logins, software security controls turned off, lack of practice audit, no accountability measures, and not being alert to potential theft.

Removing just one of these components can effectively reduce, if not eliminate, embezzlement. Unfortunately, a person’s incentive and internal rationalizations are beyond the control of the dentist, office manager, and co-workers. However, a dental practice can proactively protect themselves by eliminating opportunity.

In consideration that most embezzlers are trusted family members or longtime friends, it is plausible to assume that there are powerful external forces that exceed any established trust and respect are influencing the thief. Such a scenario reinforces the lack of control on another’s motivation and internal rationalizations, further reinforcing that minimizing opportunity is perhaps the best way to protect your practice from loss.

Minimizing opportunity can be best accomplished proactively with measures that provide accountability. Office management software that is designed with an architecture that provides accountability is a sensible, convenient, and reliable option. To confirm that your office management software also provides a level of practice accountability, ensure your software does the following:

1 Requires individual login information for each person

2 User’s logins allows program access relative to that user’s responsibilities

3 Tracks, records, and time-stamps each user’s data input and changes

4 Provides customizable reports that allow for internal audits

5 Issues Red-Flag alerts for abnormal variances in accounts receivable and accounts payable

6 Distinguishes activity between offices in a multi-office practice

Removing opportunity will provide your best odds in preventing embezzlement Next week we will conclude our three part series on practice embezzlement with how to investigate and confront an alleged thief. Until then, consider obtaining the “Observables” checklist, published by Chief Fraud Examiner William Hiltz, to assist in identifying theft in your practice.

For more information on integrating Umbie DentalCare into your business strategy call (855)835-5424. Reach our Connecticut office located at 169 Main St. Suite 800 Middletown, CT. Mail:

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