Many dentists believe their CPA will uncover embezzlement.

The truth is, most CPA’s are unlikely to detect embezzlement in a dental practice; but it’s not their fault. 

They were not hired for that job 

What’s in your wallet? 

Compilation, Review or Audit?

When year end rolls around, most dentists will engage their CPA to perform what is called a compilation engagement (sometimes referred to as “Notice to Reader”) 

Compilation Engagement [$-$$]

 This is the most common CPA reporting package performed for dentists.


A compilation is the most basic accounting service and provides no assurance.

A compilation engagement the lowest cost reporting package where the CPA simply “compiles financial statements” from the information provided by the dentist or the dentist’s bookkeeper. 

Sometimes, a CPA will ask for a report of accounts receivable printed from the dentist’s practice management software, but they don’t examine it for fraud.

CPA Review Engagement [$$-$$$]

A review engagement provides a low level of assurance.

A review engagement provides a base level of assurance from the CPA.  

The CPA will perform various analytical procedures, have discussions with the dentist and review the the financial statements to determine if the figures presented are plausible

CPA Audit Engagement [$$$-$$$$]

An audit provides reasonable assurance that the financial statements are free of material misstatements

While the review engagement ascertains whether the financial statements are plausible or believable, the audit engagement provides “reasonable” assurance that the financial statements do not contain material misstatements and were prepared in accordance with the proper accounting procedures.

Fraud Examination [$-$$]

A fraud examination can provide a high level of assurance. 

A fraud examination is intended to resolve allegations of fraud based on the presence of behavioral red-flags, patient complaints, accounting red-flags  or other clues.  

Unlike the CPA’s financial statement preparation, which often follows a linear path; a fraud examination does not follow a checklist.  Fraud examiners can adapt their workflow around messy and complex situations to develop investigations that are unique to their client.

Forensic Audit [$$-$$$$]

A forensic audit can provide the highest level of assurance

A forensic audit engagement is performed anticipation of litigation and can include a fraud examination, digital forensics, valuation and a host of other professional services. 

Common techniques used for collecting evidence in a forensic audit include the following:

  • Substantive techniques – doing a reconciliation, review of documents, etc
  • Analytical procedures – compare trends over time or comparative data from different segments
  • Computer-assisted audit techniques – computer software programs that can be used to identify fraud
  • Internal control testing to understand the loopholes which allowed the fraud to be perpetrated.
Who did what – and when?
Digital forensics is one of the tools often used in a forensic audit. 

Want to know more? 

Questions about Fraud Examinations or Forensic Audits?
Give me a call.
William Hiltz BSc MBA CET