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Governance, Risk and Compliance
Regardless of whether it’s in the healthcare industry, the mining sector or any other category, companies always need to be wary of poor operational practices. Losses aren’t something that most organizations can tolerate for long, and internal controls are critical to guarding against waste, error and fraud. As StudentDC notes, internal controls revolve around two critical notions – the division of duties and management by being present.
1. Division of labor: First and foremost, no one person should have full control over important business functions. For instance, you don’t want the person in charge of purchases to also leading accounting initiatives. This leads to potential for fraud – an employee makes a bad purchase, and tries to hide it in the books. By dividing duties up among multiple people, companies can significantly reduce the chances of mishaps.
2. Maintain presence: Internal controls are effective tools for preventing losses and achieving company goals. However, they need to be relevant, and businesses can’t understand the effectiveness of controls if they are out-of-touch with operations. Managers and executives need to be walking around their workspaces and letting people know you are observing operations.
Healthcare practices are no different than any other companies, they need effective internal controls to safeguard their operations. In fact, many medical organizations face increased scrutiny from regulators and legislation, so internal controls are even more important to businesses in this industry. Here are a few strategies that healthcare practices can implement to minimize losses:
1. Keep better records: Record management is pivotal for many business operations. Having records of everything from patient lists, medical files and even petty cash, enables healthcare organizations to spot out suspicious activity and ineffective internal controls.
2. Put two people on every task: This goes back to the “division of duties” concept. No one person should have absolute power over everything. While it’s possible to go too far in this regard – having too many people on specific tasks leads to wasted time and redundancy – more often than not, having more hands on deck will prevent fraud and suspicious activity.
3. Act first, think later: If healthcare practices owners ever think there is fraudulent activity occurring at their operations, they should contact the appropriated people. “By waiting, you not only make it more difficult for the police, you have in essence condoned the activity, and you may find it harder to prosecute,” the Student DC adds.