Ludwig on Leadership: Checks and Balances

I often scan the headlines on websites like EMSWorld.com to see the latest happenings in the EMS community. In mid-January, I saw a headline I have seen before, yet it disturbs me every time: It concerned a former EMS director and his wife arrested after an audit uncovered missing funds. In this case, an EMS director of a county service in Arkansas and his wife, who served as the bookkeeper, were accused of stealing nearly $700,000 from the EMS service over a five-year period. An audit discovered the missing money. Sadly none of the 34 employees in the service had received a pay increase in four years.

Just do a Google search and you will see this is not an uncommon occurrence in EMS.  One of the largest I found on a search for this column was the theft of $1.6 million over a seven-year period by the treasurer of a volunteer EMS organization in Long Island, NY. This averaged out to about $230,000 a year.

It appears that theft and embezzlement in EMS organizations occurs quite often. The sad part is that we are entrusted by the public with their confidence and, even though those who steal are not reflective of the entire profession, their actions form the basis of public opinion and can erode confidence.

Former President Ronald Reagan coined the phrase, “Trust but verify” when talking about his relationship with the Soviet Union on nuclear negotiations. The same is true for those who are allowed to handle money for EMS organizations.

There should be checks and balances in place for anyone who handles money in an EMS organization. If a bookkeeper or treasurer is insulted by this, then tough! It is not a question of their honesty; it is a question of maintaining the public trust. Besides, if a bookkeeper or treasurer has nothing to hide, they should not be bothered by checks and balances.

Any money that comes into an EMS organization should be put into a checking account. If you have someone who does your billing for you, have them transfer the money directly into your account instead of sending a check. The inverse is true: Any money that leaves the EMS organization should be taken out of a checking account. This documentation of receivables and payables cannot be tampered with since it is all controlled by the bank. This documentation is important later for reconciling the amount of money an EMS organization has and can help with auditing processes.

If possible, you should have at least two different employees handling payments going out. Unless they collaborate, they cannot set up a fake vendor, authorize payments and issue checks. The same goes for issuing payroll checks to employees. There have been cases of paramedics being intentionally overpaid and the difference being split between the bookkeeper and the paramedic.
As the EMS manager, you should periodically review your books. Randomly pull a transaction and ask that the bookkeeper run you through the process of how the invoice was received, paid and recorded. Ask questions of any transactions or vendors you do not recognize.

Finally, you should have a periodic independent audit conducted of your financial transactions. It does not have to be a full-blown audit, but sometimes spot audits can catch wrongdoings. Even the knowledge that periodic audits will be done by a third party is enough to keep people honest.

The protection of the funding that operates and helps your EMS organization function is essential. Any form of theft or embezzlement also eats away at the confidence the public has in your organization. Even though theft may not have anything to do with patient care, any public knowledge of the theft can transcend into the public’s confidence in all aspects of the EMS organization.

Do all you can to prevent thefts of monies in your EMS organization.

Gary Ludwig, MS, EMT-P, is chief of the Champaign (IL) Fire Department. He is a well-known author and lecturer who has managed award-winning metropolitan fire-based EMS systems in St. Louis and Memphis. He has a total of 37 years of fire and EMS experience and has been a paramedic for over 35 years. Contact him at garyludwig.com.