How to Prevent and Detect Fraud in Your Dental Practice

Brandon Waldren, CPA, CFE, CFI Senior Manager, Fraud & Forensics Division 925.819.2668 bwaldren@eidebailly.com

 

The Transcript

Art Wiederman CPA And hello, everyone, and welcome to another edition of the Art of Dental Finance and Management podcast with Art Wiederman, CPA. Welcome to the podcast. My name is Art Wiederman. If you have not listened to my podcast before, welcome for you first timers. I am a dental division director at the wonderful CPA firm of Eide Bailly. That's like Eides of March and Beetle Bailey is what I say. But we've been part of Eide Bailly now for about six months and it is just a wonderful, wonderful place. And I'm making all kinds of new friends and have all kinds of new resources for our clients.

And you are going to meet one of our senior managers in our Forensic division today, Brandon Waldren. And our topic today is very timely. We're in the middle of a pandemic. People are suffering. People are suffering financially, emotionally. And it'll be interesting to get Brandon's take on this. As far as, you know, what are the risks in a dental office for fraud and embezzlement? The statistics show, from what I've read and I'm sure Brandon will chime in on this, somewhere between one in four and one in five health care professionals get embezzled somewhere during their professional careers.

And we're going to talk about number one is what are the different things that could happen, you know, to get embezzled? How do you prevent it? What happens if you find an embezzlement? I don't think you want to just go run to the embezzler and say, oh, Joe, hey, I caught you. Good luck. You better call your lawyer. That's probably not what Brandon's going to talk about. So we'll talk about all those things and we'll get to Brandon in a moment.

I do want to share some information with you. Please. As I tell you every week, go on to our wonderful partner, Decisions in Dentistry magazine. Second to none, clinical content articles, great articles that have gotten lots of people through this challenging COVID-19 pandemic, which we're now entering our tenth month on. It's hard to believe we're so far into this. Go to www.DecisionsinDentistry.com. If you are looking for a complimentary consultation from me or a member of our Academy of Dental CPAs, please go ahead and check the box and we'll get a hold of you. And if you're not working with a dental specific CPA, you should be.

We at Eide Bailly represent over 800 dentists and our National Academy represents over 10,000 24 CPA firms across the United States that represent over 10,000 dentists. So we're recording here. We've been date stamping these, didn't have to do that till there was a pandemic, but we're doing that now. We're recording in the middle of January. And I suspect that this podcast will come out in the middle sometime end of January, beginning of February.

So, again, just a couple of things to remind you guys. The second round of PPP loans are out. You can apply up through March 31 www.Treasury.gov has got all the information. Go to your local bank, talk to them about if you applied for them for the first round and you had a more than 25 percent reduction in your revenues in any quarter in 2020 compared to 2019, it's additional free money for you. And the podcast that I recorded that came out on January the 13th has all the details about that.

Also remember that you have to, if you've got an HHS Provider Relief Fund grant, either phase one, two or three, you have to report to the Department of Health and Human Services on or before February the 15th. The portal has been opened, has been open for a couple of weeks now. It was supposed to open on January 15th, which we presume that it will. And you have to report all your information there. And you can also file for forgiveness. If your loan is less than 150,000 dollars, use the simplified form, but go back and listen to my podcast of January 13th. A lot of good information. So we'll keep you updated on all this.

Last thing before I get to Brandon, as I want to tell you, is that we are doing and I'm really excited and really proud of this. We're doing a wonderful series, a year long series called The Business of Dentistry for six local dental societies in Southern California. If you go to our website www.EideBailly.com/dentalseries you'll be able to register for our webinars, the next one we're going to have is the second Wednesday of February, and that's going to be with Kristie Boltz talking about dental marketing. And I've had Kristie fly to California. She lives in Ohio. She's actually married to one of our ADCPA members in Ohio, Jim Boltz, who's a dear friend of mine. Kristie is amazing and probably one of the best lecturers I have ever heard. And she can talk about dental marketing.

All right. So let's get to our topic today, which is dental fraud and embezzlement. I have personally had probably 4 or 5 clients that I know of that have told me that have been embezzled. Sadly, one of them was a family member who embezzled. I've been involved to a limited extent. I would certainly not call myself a forensic accountant, but folks internal controls and making sure that you're watching your store and not handing the trust over to the employee that you have trusted for 30 years is something that you need to hear and you need to know about.

So my guest today, as I mentioned, is Brandon Waldren, who is a senior manager in the Fraud and Forensic Advisory Services Office of Eide Bailly. He is out of San Ramon, California. For those of you not familiar, that's northern California. He specializes in forensic accounting for businesses. He has lots of letters in front of his name, which means he's a pretty smart guy, which is why we have him on the podcast. He's a CPA. He's a Certified Fraud Examiner, and he's also a Certified Forensic Interviewer, which means that by the time we're done with this podcast, he may be interviewing me. So, Brandon. Welcome to the Art of Dental Finance and Management.

Brandon Waldren Thanks, Art. Happy to be here.

Art Wiederman CPA Oh, thanks for coming on. I'm looking to learn. I learn every single time I hear this topic. But before we get going, I noticed in your bio that you have some interesting hobbies. You write screenplays and you teach line dancing. So, you know, if this if this accounting and forensic accounting gig doesn't work out, maybe the screenplay thing. So tell us about that for a second.

Brandon Waldren Yeah, no, when I was growing up and I was working as an auditor, I would do the long, late nights of working on clients and helping them out with wrapping up audits. And in doing so, sometimes I had some difficult times gone to sleep and the best thing I could think of was to write because it's hard to be creative and, you know, be thinking about work at the same time. So started and I plus I love movies. I've seen around 1500 of them. So just I just love movies and was like, you know what, I've got some stories that maybe I can make up and tell. And so I've been sitting there writing movie scripts ever since. I've written 9 full length feature films. None of them have been purchased or published yet, but obviously I'm hoping one day one of them might make it.

Art Wiederman CPA What's your favorite movie of all time?

Brandon Waldren Uh, you know, I really enjoy A Few Good Men. That's definitely one of my top favorites there. And it definitely, I think, got me started with investigating, that and my childhood hero Indiana Jones. I always wanted to find buried treasure and find things like that, but instead I took it the forensic route and I get to go treasure hunting every day.

Art Wiederman CPA I would say that's what you do in your in your forensic work. And then how does the line dancing, why are you still getting to do that during the pandemic or do you kind of had to put that on hold?

Brandon Waldren I had unfortunately put that on hold. I was part of a very good and fantastic group called the Ohana Group. It's a bunch of friends of mine. And we would go on Friday nights and teach line dancing at a club called the Saddle Rack in Fremont, California. Unfortunately, the Saddle Rack had to close due to the pandemic, which was really sad. It had been open for over 30 years and it was a well known place in the area for country line dancing. So once this pandemic is over, I plan on finding a different place to hopefully possibly teach line dancing. But it was definitely my favorite thing to do on Friday night. It's very relaxing and very enjoyable.

Art Wiederman CPA Well, if you need someone to show your students how not to do it, how not to line dance, I'd be happy to participate. The only time I've ever lied dance was on a on a cruise. I've done it several times and somebody shot a video of it once and then I stopped line dancing. It got pretty ugly, but we won't go too deep into that. Hey, so Brandon, why don't you give us a little bit about your story, your journey, your experience, how you got to Eide Bailly and all that stuff before we get to our topic?

Brandon Waldren Absolutely. Absolutely. My. First CPA firm I worked for was a local CPA firm that specialized in construction contractors and other business entities. At first I enjoyed working with them, but I wanted to get into a different field of industry. And so I went to Vavrinek Trine Day and Vavrinek Trine Day. I was with them for 5 years. And we specialized in school districts, non-profits, colleges and also just general business practices and really enjoyed that, really enjoyed the people I was working with and really enjoyed my job. I started to really get involved with my clients and understand their business and understand ways that we could help improve it. But unfortunately, there would always come a point where I would have to stop.

When you do audits, although audits are great, you know, there does come a point where it's outside the scope of your audit and you can't look into things further, unfortunately, unless specifically requested. And so I was like, you know what? I want to help my clients go all the way if we feel like there's something going on that's fishy or things like that. And I actually had two clients specifically come up to me and they were like, hey, Brandon, we're very uncomfortable with our vacation accruals right now. You know, we're very nervous about some of the disbursements that we're seeing. Could you look into this? And we were able to discuss it and move forward with that investigation, which then ended up resulting in us finding out that the facilities manager was indeed skewing the vacation balances for his employees.

Art Wiederman CPA Interesting.

Brandon Waldren And so. Yeah, and so after that, I was like, you know what, I want to I want to continue doing this. I want to continue helping my clients solve the problems that keep them up at night, because to me, that really adds value to my job, adds value to my career and adds value to my life. So I went and got my CFE, my CFI, and started doing that. And I've loved it ever since. When Eide Bailly bought Vavrinek Trine and Day they were like, hey, we need somebody that's doing fraud and forensics in California and Vavrinek Trine and Day and they said, hey, Brandon's your guy. And so I was immediately transferred to full time with Eide Bailly and been doing it ever since. And the rest is history.

Art Wiederman CPA Fantastic. Well, very important topic. Very, very important because everybody you all work very, very hard. And we want you to keep what you make. Kind of hard to keep it if someone is dipping into the till here.

So let's start off. I know that there's Brandon. We talk about there's two sides of every business. There's the revenue side and everybody thinks of embezzlement as you know, the front office person, the dental office is going to take the cash and make an adjustment or they're going to deposit checks or credit cards or stuff. But there's another side of this I think we're going to start off with today, which is basically maybe on, you know, some other methods on the expense side. I mean, I've heard things from, you know, using their dental practices Amazon account to make personal purchases, forging owners signatures on checks, fake employees, confidential information using as blackmail. I mean, so get into some of the stuff that doesn't have to do with actually stealing money as far as embezzlement goes. And how does that, what have you seen there in dental offices?

Brandon Waldren Well, I've seen both, but I definitely see lately more of the expense side being the one the way that people are starting to embezzle money from their dental practices. And unfortunately, it can grow to an extreme amount. One of the cases that we had unfortunately amounted to around 480,000, which was embezzled over the course of 7 years.

And it was most people thought, oh, she's stealing receipts or things of that sort. Well, it ended up being that this particular person was making payments to their personal credit cards, was doing unauthorized disbursements to themselves, as you said, counterfeiting the signatures on the checks to make things go to her and appeared legitimate. So unfortunately, it is well known that there is other sides to fraud other than just the revenues and the receipts. And people just naturally think, oh, I need to watch the money coming in, which is extremely true. But also you should take as much caution in looking at the money going out.

Art Wiederman CPA So let's get into that a little more Brandon. So my dentist is running a practice. It's doing a million dollars a year. They use Quick Books, they write checks, they pay bills a couple of ways. There's three ways they'll do an automatic debit from the bank account. They'll have a credit card charge or they'll actually write checks. So what, give our listeners some tips. What kind of controls should the owner of a dental practice put in to, you know, mitigate someone being able to get into the bank account and do what you said is pay would you say 480,000 dollars in personal bills over 7 years. That's I mean, for someone not to know that that's going on for 7 years, somebody was not paying attention. So what are some tips as far as how we can mitigate and reduce the risk that that would happen to our listeners?

Brandon Waldren OK, well, the first thing I want to address, though, is something that I think is important to say in regards to internal controls for disbursements or any kind of area. If someone's going to do fraud and actually commit fraud, no matter what preventative measures you do, they will eventually do it. As my mom says, if a criminal's really sets their minds to coming, into your home, they're going to come in and, you know, I can put all these locks on my door, but they'll climb through my window instead.

And so the majority of these preventative measures are not just ways to hopefully stop them from trying to commit fraud, but also in place to hopefully convince them to not even try it, that if they try it, they'll set off alarms and it will they'll get caught extremely quickly. And we call this the perception of detection. This is what we call in the fraud industry. And it's the most effective internal control to prevent or detect fraud.

And so keeping this in mind, some of the things that I would recommend for internal controls to do that would be first, I've heard of some dental offices that use a signature stamp. The person, the owner or the person who signs the checks is busy, obviously running a dental office and doing what they love doing. And so they'll give the office manager a signature stamp, highly not recommended. I recommend that, unfortunately, the person who's authorized to make the payments actually put their signatures on checks. This is definitely the number one way for people counterfeiting the owner's signature.

Second of all, as you mentioned before, Amazon purchases. Unfortunately, Amazon purchases are definitely something that has escalated in our fraud cases, not just in the dental practice world, but in other area industries. And so what we definitely recommend for Amazon users is definitely have either have the owner be the only person who has access to the Amazon purchases and therefore they have to make the purchase themselves. Or what we recommend also is, is that specifically have the owner's credit card on the Amazon expenses if necessary, so that the business card or the owner's card, because obviously they're going to be more we'll call it more motivated to look at the specific charges and want to see the support documentation that of why those actual charges went into to being purchased.

And then I guess the other thing I could think of is in regards to checks having at least 5 or 6 people or 2 or 3 if necessary, if you have a small practice, look over the checks before they go out. It shouldn't be a secret why that purchase is being made. If it's a secret, then there's a problem.

Art Wiederman CPA And again, one of the things, I mean, like I say, I'm not a forensic accountant at all, but I do know that segregation of duties is one way to mitigate this. And if you can have 2 or 3 people looking at things, we're going to get into deposits in great, great detail, I'm sure, in this conversation. But I mean, you don't give your front office person the credit card and then they're an authorized person. And then as far as checks go, do you like to see, like, the owner should sign all the checks, don't you think?

Brandon Waldren I do. I do think that the owner should sign all the checks, unfortunately, due to sometimes, as you said, the segregation of duties sometimes that it is a difficult thing to do. But I do highly recommend that in person, and if the owner is not available or willing to do that, then at the very least I would recommend that the bank statements be sent directly to them. And in those bank statements, they always have copies or pictures of any check that has been cashed based on their practice.

So at the very least, if they get those bank statements, they can spend five or 10 minutes looking over all those checks. And those pictures of those checks will list the vendors. They'll list the amount given. They'll list the date of when that check was cashed and when it was written. And they can look into that and at least have a general idea of what's going on with their money.

Art Wiederman CPA So one of the things you talked about, and I think that's great perception of detection. Now, you know, I don't teach management, but I talk to doctors about management. But what you don't want to do the first day that you hire an employee, say, oh, by the way, I have all these controls to make sure you don't steal from me, we don't put it quite that way. But if the employees, like you said, if they know that someone is watching everything that's going on, you see that as a deterrent, don't you?

Brandon Waldren I do. But also just some surprises is good every once in a while. You don't have to specifically say, hey, I'm surprising you to see if you're committing fraud. You could just do some basic stuff that would surprise them and keep them on their toes. So, for example, the owner of the dental practice can ask specifically for individuals to go on vacation. They could ask them to cross train, you know, ask the office manager to cross train someone so that way then when they do want to go on vacation, someone else can take over their duties.

You could have surprise cash counts. You can have surprise request for invoice support. You can force if you have if the owner has access or has direct communication with the IT person, you can have them force a password change. That usually is a nice, easy way to throw a surprise at someone, because if they have to change their password, they wonder, well, who's been in my account or who's who caused me to have to change my password. And so that might get people naturally nervous.

And obviously, the goal, as you said, is not to say to your staff, hey, I don't trust you I'm doing this to make sure you're not committing fraud. However, the goal is to at least let them know that you are watching and that you take and that the owners take fraud very seriously. And because of that, they are making sure that there are internal controls in place and that they're you know, you can't predict when a surprise cash count or a surprise review of the checks or a surprise forced vacation is going to happen. And so therefore, you might as well not waste your time or energy trying to commit fraud.

Art Wiederman CPA And I've heard from some of the clients that I have is some of the employees don't want to take a vacation because then they can't cover their tracks, right?

Brandon Waldren Absolutely. This is one of the number one things that we see. Statistics kind of give us a general idea of what a fraudster looks like, not just in the dental practice industry, but just in other industries. What we typically see is unfortunately, they're the ones that don't want to go on vacation. They're the ones that stay late and come in early. They're the ones that are overly possessive of their work to the fact they don't feel comfortable cross training somebody or they might even be very rude to them in the cross training and basically say this is a waste of time. I'm just going to always be doing this back off. So when you have an employee who doesn't want to take vacations, is very possessive of their work, very possessive of what they have access to and what they don't and is not willing to share around the office what they're doing, then clearly that's usually some big red flags that we think, OK, maybe there's something fishy going on.

Art Wiederman CPA And if you ask them what's going on, say, tell me about the check and they get all kind of huffy with you, like, well, you know, I take care of that. You don't have to worry about that. Why are you asking me this?

Brandon Waldren Well, that would definitely be a red flag to me, especially being a forensic interviewer. But one of the things that I would follow it up with is just, you know what? I'm just confused on this and just want some extra information. Just want some extra information to understand it. I mean, if you have to call someone out on something. Yes. If they think that you don't trust them and they're doing something wrong, they will be very pushy. But if you make it like, hey, you know, I'm sorry, I don't understand something, I would like some support documentation or some information to help me understand this.

No one can tell you don't understand something. No one could come to me and say, Brandon, you don't need to ask that. You understand what's going on. I, would say, no, I don't understand. So that's why I'm asking. So please, can I receive that information? And typically that will help kind of get past that, at least that first gate that you will face. I'm sure there'll be multiple gates that pop up like, oh, well, I don't have access to the system right now or I I can get back to you on that or things of that sort that you'll have to get through. But definitely the first batch is always simply what I was looking into this and I just I want to understand it a little bit better. Could you please give me the support so I can look at it better?

Art Wiederman CPA All right, Brandon, let's talk about gross receipts, because this is a big part of what we're going to talk about today. So we're going to go to, you know, embezzlement of gross receipts 101 is what we're going to do right here. And it's like, so I have Dr. Wiederman brings you into my dental office. I said, you know, Brandon, I heard this podcast. You sound like you really know what you're doing. And, you know, I've really not tended the store the way I should of the last 15 years of my practice. And I would like you to put in some basic systems in a dental office. OK, so I bring you in. You've never met me. Where do you start? If someone's not done any of this, how do we put in good systems to track and make sure that all the money that comes in goes in the bank and not in somebody's pocket?

Brandon Waldren Well, the very first thing that we always do in any type of investigation, whether it be an internal control examination, an ICE audit is what we call it, or a specific fraud forensic examination where we suspect something is wrong and we come in. The first thing we do is we look at the policies and procedures in place at the office.

Now, this is a this is a two-way street because there's always the what they're supposed to be doing it versus what's actually happening. And so what we tend to do is we will first request documentation from the owner stating what are they supposed to be doing? And then after we do that, we'll have interviews with personnel and we'll also request some support documentation from specific deposits to verify if what they're telling us is happening is actually happening. Now, if we see discrepancies in there, then naturally that would help form what areas we're going to look into as far as the cash receipts go.

Now, some of the things that I've that I've seen in many instances when cash is involved is there a safe and more importantly, who has access to it? Because if one person has access to the safe and cash goes missing, then clearly that helps us determine, OK, this is one person that we should possibly take a look at. Now, in reality, it doesn't work that way. In reality, you have one safe and as sad as this is, all four people in the office have access to the safe, whether it be to get into cash, to do exchanges, or maybe they have gift cards or something in there that they're holding, or maybe they have some private confidential information they're holding in the safe.

Unfortunately, that's the way it happens. And so when we have multiple people in the safe, it does cause a lot of issues as far as money going missing and especially when it comes to the cash, because unfortunately, as sad as this is, if I was going to commit dispersement fraud, I actually would try to do it most likely in this, with the cash that's in the safe because that cash has no check behind. It has no signature meeting. And so therefore, all I have to do is swipe at 10, go make the purchase that I made.

And as long as the documentation is out of reach or unable to be obtained, then no one's going to really know whether or not that I stole the cash. That's called skimming. And unfortunately, skimming is when fraud happens before things are recorded and cash larceny has happened after things are recorded. So we've seen a significant amount of cases in skimming, but unfortunately, it's one of the hardest things to detect because there's no backup.

So the one thing that we definitely recommend is, is if you don't have a specific tracking system such as Dentrix or Eagle Soft or Specifics or Quick Books or something like that, that people are actually using to record the receipts, then at the very, very, very least, we would recommend a three tier receipt book where you have a white copy, a yellow copy and a pink copy. And so then when you write down that specific amounts where we see throughout the day, the pink copies should remain in the book, the yellow copy should go with the cash that's being deposited in the safe and the white copy goes directly to the person who hands you the cash, the person that had the dental work completed.

So that would be some minor basic things that we would recommend. But certainly we would definitely look at the safe procedures. We'd look at the procedures regarding how cash is received, how it's recorded, and then we would naturally do a full examination over the receipts just to do a general just to see, OK, is there anything missing and what amounts seem to be missing or appear to be missing, then that's when things get really fun and interesting for me.

Art Wiederman CPA So let's talk about the basic concept of, you know, from the time a patient comes in and they pay and then the money goes in the bank, because I know obviously segregation of duties, it would be nice if we had, you know, one person who prepared the billing, one person who got the check, one person who made the bank deposit. In a lot of cases, and then one person who reconciled the bank statement in a lot of cases in a smaller dental office that's not possible. The bigger office as it is.

But again, if I came to you, Brandon, and I said, listen, I got a dental office, I got two people at the front desk, give me the basics of a good internal control system for collecting receipts. And then what should the doctor be looking at the end of every day, every week. So maybe just some of the basics on employee A does this procedure, employee B, does this procedure or something like that?

Brandon Waldren OK, what we typically recommend is to stay away from the ARC problem A, R, C and A stands for Authorization. R stands for Recording and C stands for Custodial. And so what we're talking about is there is not, there shouldn't be one person in that office that has two or more of those particular things. So again, first is the authorization. That's the person who is approving the receipt, approving the payment, approving anything. Right.

So the person who's approving the receipt, approving the deposit, approving the count, approving anything like that should not be the person who's also recording. That needs to be two separate people. And then the person who's doing the recording needs to be separate from the person who has actual possession of the cash. If I had both of those, let's use that as an example. Let's say that I had possession of the cash and I receive 20 dollars. And I'm also the person that's in charge of recording how much cash was received that day. If I received 20 dollars and I'm in charge of recording it, I could easily swipe a 10 and just record that 10 dollars came in and you wouldn't know because obviously I have possession of both the recording and the custodian.

So the main thing that we always recommend to individuals is you want to stay away from the ARC problem so you shouldn't have one person have the possession of the cash, the recording of the cash and certainly the authorization to make the deposit. So right off the bat, the person who's depositing the cash should be completely different than the person who's actually recording the cash. That's like numero uno. The one thing that you need to do.

Second would be the checker. This is the person who's authorizing it. Right? You need to have a third person in that system that's checking it. Now, the way that this could be is, let's say, for example, I'm the office manager. And my job is to record it in the system. So I should have I shouldn't have possession of the cash. I shouldn't be the one grabbing the 20s and recording it. So therefore someone else has the records or has the ability to collect the cash. Something a piece of paper should be sent to me or a notification through Dentrix or Eagle Soft should be sent to me that says, OK, we have this amount of cash that was received today so that I can record it without the person giving me possession of the cash.

Then. No, that's all right. Then the person who is authorizing the approval for the deposit should have the person who has possession of the cash, provide them with a count and it should be a documented count. You should see how much was actually there. The person who's making the deposit should then review double count that deposit say, yes, I agree with this person's count, sign off on the piece, on the count, saying, yes, I have I have agreed that this is the count that should be deposited and this is the amount that I have received. And then the person who takes the deposit over should not have possession of that counting document, that should be given to the person who originally had it. Does that make sense to you?

Art Wiederman CPA Makes absolute total sense. So let's take a quick break here. I want you to give out your contact information, folks. Again, y'all work too hard, way too hard to have somebody who has made themselves an unannounced partner in your business take your money, and that's either taking your gross receipts or spending your money that you don't know about.

So, Brandon, first, I want you to give out your contact information, how people can get a hold of you both your phone number and your email address. But, you know, let's say I have a dentist out there who hears this and they have some suspicions or they're starting a new practice or a new office. Maybe talk a little bit about what how you might be able to work with a dental office. So start with your contacts and then talk about how you might be able to work with some of the folks that might be listening here.

Brandon Waldren Absolutely. Well, I'm going to give you guys my cell phone number. My cell phone number is 925.819.2668. And I have it on me every day, pretty much all the time. And then for my email address, it's bwaldren@EideBailly.com.

Art Wiederman CPA Yeah. I'm not very good with numbers guys. Oh I didn't, I'm not supposed to say that I'm a CPA. I'm good with numbers. I just, I wanted to write it down so I get it right on the show notes. So if somebody needs and I think a forensic examination or something like that. How would that work with the dental office? I mean, you would call and do an initial conversation with the doctor, do you have them fill out a questionnaire? How does that work?

Brandon Waldren Well, there's plenty of ways that we could start the process. The first way that they could do it, as if they would prefer they could just submit a request on our website, on our fraud and forensics website. We have a way that they can request us in our services. And obviously someone will get back to you within 24 hours.

If you decide to just call me directly or email me directly, I would schedule a 20 to 30 minute conversation with you. Obviously, this isn't chargeable. It's just simply us talking. And so what would happen is they would give us a call. We kind of discuss their suspicions and discuss what evidence that they are noticing or anything that they are finding that is causing them to have this suspicion and then we would decide how to proceed.

Now, that's if there is a suspicion. Let's say there's someone who doesn't have a suspicion but just wants to do a check in. Just a basic you know, I don't have, I don't believe someone is committing fraud or I don't believe I don't have a suspicion that something's being done wrong. But I just want a quick check in just to make sure that things are going the way that it should.

That's what we call that ICE audit, the internal control examination. And what we do is we come in and we specifically look over the internal controls that are in place in the dental practice and we verify, are there any loopholes? Is there any way that someone could commit fraud within this particular dental practice? And then we give them a report that specifically summarizes ways that we would recommend them to obviously improve their internal controls, or if, God forbid, we did this ICE audit and found any evidence of particular suspicions or someone doing fraud, how we would go about proceeding and doing that investigation.

Art Wiederman CPA OK, that's great information, Brandon. So one thing before I get into what do we do if we find something, I want to ask about kind of the interaction. You mentioned Dentrix and Eagle Soft which is everybody knows, 80 to 90 percent of all dentists in America use those two programs. And I know that there's a thing called an audit trail and that, you know.

So how would one work with their IT person who also knows something about this? Not anywhere near what you know, but how would one work in the software? Are there some things you can do proactively to mitigate this? Some preventions, some locks, locking passwords, anything that you recommend for a dental office that might again mitigate this?

Brandon Waldren Well, the first thing I would recommend is, unfortunately, common sense. Don't share your password.

Art Wiederman CPA Don't go down that road, please.

Brandon Waldren Yeah. Hey, yeah. You know, don't share your password. Your password is specifically for you. You should not be sharing passwords amongst the office. And unfortunately, it has happened. It's always kind of awkward when I'm in an interview with the suspect and I ask them, have you shared your password? And of course, they usually avoid the question, but eventually I get the answer. Yes, I have. And so the first thing I would say is common sense, please do not share your password.

Second thing I would say is, is that it needs to be very well known to the owner who has the top ranking rights to do things within those individual software. Typically what we see is the office manager has all the rights to everything and then everyone else has limited access to specific modules. I would highly recommend that the office manager review with their IT person, whoever that might be, how much access the office manager really has to modules and reports and things of that sort, and then specifically tailor how much of that is really needed to the office manager.

Naturally, for example, I had this with a different software regarding payroll. There was two software and one person could basically had to print a report and then that report had to be imported into the payroll software. Well, because this person had access to take the first report out, they would print the payroll report, alter it to fit their better needs, and then import it into the payroll system to get paid. So they're off their hours would increase dramatically. And obviously, that was a type of fraud that they would do.

Art Wiederman CPA I've seen that, too.

Brandon Waldren And so because of that same thing here with Dentrix and Eagle Soft, you should really understand who could run what report and is that really necessary? And if it isn't necessary, then it should be removed.

Brandon Waldren Yeah, I want to spend the rest of the time, Brandon, talking about, you know, we talked we talked about, you know, the systems you should have, systems for revenue systems to make sure that people don't spend your money through checks or credit cards.

Art Wiederman CPA OK, so now the last thing the last piece of this puzzle for this podcast is, all right, what happens if I find something? What happens if I suspect something? I mean, sometimes a dentist will just flat out find the fraud slam dunk, there it is, a two year old could figure it out. Other times he or she might just be suspecting it.

So let's start off what if I'm suspecting or I actually, I guess or if I actually find a fraud, what should they do? Like I said earlier in the program, you don't go to the person and say Susie you know, I think I caught you stealing money from me. I just want to let you know that I know now. That's the last thing you want to do, right?

Brandon Waldren Correct. That's the last thing you want to do. And the main reason being is, is because you obviously, when this happens, owners are naturally upset because unfortunately, as you stated before, Art, that you've heard of cases where loved ones were the ones stealing from the practice and a lot of practice, dental practices are run by family. My mother is a registered dental assistant. My aunt is one also. And she works with a relative in a dental office as well. So firsthand, I know how close and personal a betrayal of fraud can be. And so because of that, the first thing that we always recommend them to do is don't confront the person. We want the suspect needs to be unaware as much and as long as possible.

Not only that, but because one of the main mistakes that could happen, and this is even as a fraud examiner, you may have something dead to rights with one thing, but that doesn't necessarily mean that there aren't two or other frauds going on that you're not aware of. So I may be like, yes, they're stealing the cash receipts. It's plain as day, I see it. And so therefore, I'm going to go talk to this person and say that they have been committing fraud with me with cash receipts.

Well, before you know it, if you don't talk to that person directly and you do an investigation, then you might find that in addition to them committing fraud with the cash receipts, they're also doing it through the expenses. Maybe they're forging checks that you aren't aware of. Maybe they're doing other types of frauds and all of that is taking money away from you. So the very first thing we do is they keep the suspect unaware.

Second, we recommend that you reach out to your external bookkeeper, your auditor, your fraud examiner, and you specifically request an examination to be made, because guess what, if the owner wishes to sue, whether in criminal or in civil court or terminate that employee, it's highly recommended to have this examination in order to protect them from making mistakes that might lead to issues that would hurt them.

For example, let's say you quickly rush the process, you terminate this employee. I have seen cases where the terminated employee tries to sue the dental office or other offices for wrongful termination, and it causes a big, big, huge mess that I'm sure the dental practice doesn't want. So if they call in the investigator or call in the auditors, we come in, we do our investigation. We have evidence backing that, hey, this person really did steal.

And naturally that's what we love doing, because that's one of the things I love about my job. It's black and white. It simply, did this person take the money? If so, here is the evidence. And so we investigate the evidence. We show them the type of evidence that we found and we go from there.

So and then lastly, if someone if you suspect that someone is committing fraud, be aware of the evidence that you have found that makes it that way. So, as you said, a two year old can feel like someone's committing fraud. If that's the case, you need to save all that paperwork or make copies of all that paperwork or make screenshots or print reports that show that because unfortunately, the minute that the suspect becomes aware, they can go through and delete their whole hard drive or delete certain things, that obviously would be very detrimental to the case.

Now, the blessing is, is that we at Eide Bailly have a team of 20 fraud and forensic examiners and we've been continuously resolving cases both now and prior to COVID with digital forensics. We do have the ability to look at hard drives. We do have the ability to obtain some deleted documents from not only just the hard drives, but phones, laptops, iPads, things of that sort.

So we have the skills to do that. But naturally, we want to avoid issues of things being deleted. And so if you really do believe that you have fraud on your hands, you should definitely make copies, screenshots, pictures on your phone, even if necessary, of what you saw. So that way then the fraud examiners could use that to help in their investigation.

Art Wiederman CPA So in this subject, let me. Because something popped into my head. And I don't want to forget to ask you about it, so we go ahead. I suspect Dr. Wiederman suspects that there might be something going on. And so I call Brandon, I call Eide Bailly, and I say, hey, guys, would you please go in and do a forensic audit or whatever? And you're then going to go into the Dentrix or Eagle Soft and into the practice management software.

My concern is and how do we mitigate this is many, many times in a dental office. I will tell you, I sell dental practices too Brendan and we ask the dentist before we put the practice up for sale, we say to them, can you print me management reports? And I will tell you one third to one half of the time they say, I don't even know what the password is to get into my computer. So it's always the people at the front desk.

We can't tell the people at the front desk we're selling because that would blow up the sale. But the point is, is that if you go in there and you start looking around and you look and someone who's real familiar with that computer can see afterwards that you did that, could they then be tipped off if you did this forensic audit, could they be tipped off that you now that the doctor is suspecting something and now they got to, you know, burn the evidence, get out of town, go to the Maldives or something? How do you prevent them when you go and do your forensic of ever knowing that you were ever into the computer system? Can you do that?

Brandon Waldren Yeah, we can do that, we can do that. Typically, what ends up happening, there are ways that we would instruct the dentist office, the dental office to help us in doing so. And I can't give you all the secrets over this podcast.

Art Wiederman CPA No, no.

Brandon Waldren Yeah, but let's just say there are ways that we do it still. It's very, very, very doable. And we are able to do it without someone knowing that we got access to the hard drive, because essentially what, one of the things that we would do is just make a copy. That's essentially what we're doing. So there are ways for us to get access to that hard drive, make the copy and then get out of there. And they not know that we made the copy. And so there are ways for us to get information that we need specific to the type of investigation that we're going for.

Art Wiederman CPA OK, so and I've actually been involved, not as a forensic accountant, but as an expert witness in a couple of embezzlement cases years and years ago. And I know, you know, you're dealing with attorneys and litigators and all this stuff. So let's say you go in there and you find it. A lot of times people that are, in my experience Brandon is people that are embezzlers are, they're not wealthy people. If they were wealthy, they wouldn't have to embezzle.

These are people that are in debt. They have gambling debts. They have alcohol problem. They have all kinds of problems. And, you know, so how do we, I mean, is there any way for us to get this money back if you discover a fraud, how does that process work? If you find it, the doctor's going to say, that's great, I can pay you lots of great fees to find it, but how do I get my money back?

Brandon Waldren Civil litigation is always an option for recovery of funds that are missing, and it's definitely a path that most individuals don't want to take because they're afraid of how much cost the civil litigation will be to them for lawyer fees and such, or God forbid, something that I've seen occurring in multiple fraud cases, that the amount that was stolen doesn't necessarily equate to have it be worth the civil litigations. For example, I've seen where an individual takes just 5,000 dollars and the amount to go through the civil litigation will be 10 to 20 thousand dollars. So of course you're not going to do that. So some of the other things that we recommend is insurance. There's definitely some coverage that insurance companies will offer.

There's a range of different things that can be done based on the amount of money that was stolen, how much money was stolen, and more importantly, who you're working with.

As sad as it is, there are a lot of fraud cases in a dental office because, again, it could be a family member, it could be a close friend where things aren't prosecuted and things are not taken care of. If they're not taken care of properly, not only will it ruin your relationship with that person, but more importantly, it could also cause some issues with other individuals thinking I could commit fraud in this place and nothing's going to happen. So you do need to do.

Art Wiederman CPA Exactly ramification.

Brandon Waldren So you do need to do something. It's just a matter of how much extent was stolen and also what you're willing to do at that point in time.

Art Wiederman CPA Yeah, and the thing is, is if this is a person who has been deeply in debt and maybe before I go that route, do you sometimes recommend that people who have been embezzled, that they hire White-Collar investigators to see what kind of assets people have? And I know you're not a licensed attorney, but is that done sometimes because you could have the best ironclad open-and-shut, fraud, theft, embezzlement case in the world. But I think there's a term in this life that says you can't get blood out of a turnip. So do you sometimes say to the client, listen, do we need to investigate this person and how is that done, if it's done at all?

Brandon Waldren Well, there are some small things that we can do, but the stuff that you're primarily talking about would be directly useful with the attorney. Know the attorney would be the person that would be able to subpoena the records that would show us if there is any hidden assets. Now, we are trained in determining and detecting if there are hidden assets in someone's accounts and looking at their bank records and stuff so we can do that if the information is obtained.

Art Wiederman CPA So I'm thinking that the team here, Brandon, you're probably the first person that the doctor should call. If they suspect or found something, then I think we maybe need two more team members. We need the litigation attorney who might file either criminal or civil suit against the alleged perpetrator. I watched I used to watch Law and Order all the time. So I know all the terms, alleged perpetrator that. And maybe we also probably need to call a an H.R. labor attorney to make sure that whatever we do and how we act or this employee that we don't get sued, like you said earlier, for labor violations, that that's pretty much our team is you the forensic accountant, the litigating attorney, and then the potentially in H.R. attorney, if necessary.

Brandon Waldren I would say that's correct, with one caveat. We also want the owner involved, obviously, as part of that team as well, because obviously he's going to be the one, he or she, is the one that we're talking to directly. And we're specifically saying, hey, this is you know, this is what we're finding. This is what we're seeing. How would you like to go? How would you like to proceed?

So definitely lawyers are something that we would definitely recommend. And if they don't know any, naturally due to our work, we do have other, we do have specific contacts that we could refer them to in order to help them with those type of issues.

Art Wiederman CPA OK, last question for you today, because unfortunately, we're about out of time here. All right. How has COVID affected all of your work and what's happening in dental offices? What are you seeing? And I guess businesses in general, are you seeing more of this, less of this because of the pandemic?

Brandon Waldren It's a great question. And what's funny is, is I've actually gotten this question quite a bit, not just with clients, but also just in regards to networking or marketing meetings that I've had. And simply this is what I have been telling them. My answer is, is that fraud was happening before COVID and it's possibly being done during COVID. But the reason that we're seeing an increase in cases during COVID is because individuals have the time now to look over their records.

Naturally, during the shut down, there was a big chunk of time there where individuals weren't working or if they were, they were doing it from home or things of that sort. So now they have the time to look over their records and take a look over years and years worth of records and time. And they're like, wow, what is this? Oh, this must be a problem. And then, of course, they call us.

So as we've stated before, I would say that, I wouldn't say that there has been a dramatic increase in fraud due to COVID, but I would certainly say there's been an increase in fraud cases coming forward because of the fact that individuals have the time to look over their records and information.

Art Wiederman CPA Well, I will tell you, you are a wealth of information Brandon. I really appreciate your time today. Folks. It's really important. We want you to keep what you make. We don't want you to have a new partner that doesn't have a partnership agreement with you.

So, Brandon, if any of our listeners, whether they're an Eide Bailly client or not, or an ADCPA client or not, if they want to ask you a question, give you a call, if you suspect something, what would be, again, the best way to get a hold of you, both number and your email address?

Brandon Waldren I would say, again, you can call me on my cell 925.819.2668. You could send me an email at bwaldren@EideBailly.com. You can go to our website and submit a request for someone to reach out to you. I would reach out to you within the first 24 hours of you putting in that submission. Or you guys can reach out to me on LinkedIn as well and just request to talk to me there.

So there's plenty of ways to get a hold of me. And I certainly want to be here and help anyone who has issues. As I said before, I love my job. I love protecting clients. I love helping them not have any individuals taking advantage of them, because unfortunately, as bad as everything is getting out there in the world, not just with COVID, but with other things going on, we certainly wouldn't want to add the stress of someone taking advantage of you as well. So I definitely enjoy helping all of my clients and I'm here to help in any way I can.

Art Wiederman CPA And the last question is, so do you offer a free line dancing class with every forensic audit? Is that how that works?

Brandon Waldren Here's what I would say. If they wanted one, I certainly would have no problem teaching them one. I have some basic ones that would be very easy to teach over a video chat in the first 10 minutes, but certainly not something that I would propose to all clients.

Art Wiederman CPA OK, sounds good. Listen, Brandon, hang on. As I kind of wrap up the show and take it to the end. But ladies and gentlemen, thank you again for the honor and privilege of your time. I am very hopeful that this information is helpful to you. We've got lots of great topics coming up. I've got some special guests coming up. Again, not going to not going to spoil it. I did get to interview the executive director of the American Dental Association. I've got some other, what I think you're going to think are really cool people coming up on the podcast in the next couple of months.

If you want to get a hold of me in my office in Tustin, I'm at 657.279.3243. That's directly goes right to my computer. And I actually now know how the Skype works. And I press the right button and it comes right through to my headphones. It works out really well. Or you can email me at awiederman@eidebailly.com. Don't spell it E I, the state of New York spelled it E I on my birth certificate. They had to fix it down the road, but it's awiederman@EideBailly.com.  Same we use it Eide Bailly we use our first initial last name at Eide Bailly.

Be sure to go to our website for our partner Decisions in Dentistry magazine. www.DecisionsinDentistry.com.  Be sure to check out the website of our Academy of Dentals CPAs. 24 CPA firms that represent over 10,000 dentists www.adcpa.org.

And do sign up for our webinar series. The great thing about, you know, there's many, many downsides of this pandemic, as we all know. But one of the great things about it is that now everything is virtual and you know, we don't have to limit the people of someone in Pennsylvania wants to listen to the webinar. And it's good information. They all they got to do is click on their computer. So go to www.EideBailly.com/dentalseries to sign up.

We have we have three of them. We have on the third a second Wednesday of every month is going to be the business of dentistry, 6:00 to 8:00 p.m. California time. And it will also be recorded and on our Eide Bailly website, all of these. We have a four-part transition series. So if you are thinking about buying or selling a dental practice anywhere in the United States, we've got an attorney. We've got me talking about valuation taxes and what people want. We have a great dental management consultant who's going to be talking about that. That first one is January the 20th. Again, it'll be on tape so you can see it. And then a bank to talk about how the lending works.

And then we have a new dentist series in February and March. Well, ladies and gentlemen, thank you again for, like I said, the honor and privilege of your time and for listening to my podcast. Please tell all your friends about it. This is good information. It's helpful information. And again, my legacy is to help the dental profession to be more successful, be more profitable and for you guys to enjoy yourselves.

Now, nobody's enjoyed themselves a whole heck of a lot the last 9 to 10 months, but we're hoping that 2021 will change all of that. And, uh, I'm very happy. optimistic and I will go back again, like I said at the end of every single episode of the Art of Dental Finance and Management my five-word rallying cry is failure is not an option. If you're not working on your business, if you're not doing things to make your systems better, to make sure that your internal control systems are better.

And by the way, I didn't even mention this. Brandon and his team are going to do one of those 12 Business of Dentistry series. We've got our cybersecurity group, and Brandon's group is going to do it in March and April. So make sure that you stay tuned for that. So this was kind of a teaser. Uh, as my Peloton teacher in England, they have people in New York and people in England. So the teacher in England says it's just a teaser. Well, this is a teaser for you. March and April we're going to have those groups talking about cybersecurity and internal controls.

So with that said, that is about it for the Art of Dental Finance and Management with Art Wiederman, CPA. Again, thank you so much for listening. And we'll see you next time. Bye bye.