If you are currently operating a business with less than 100 employees, lack of internal controls will be the biggest internal control weakness allowing employees to steal. According to the 2010 Global Fraud Study published by the Association of Certified Fraud Examiners, “Lack of Internal Controls” is the leading cause for employee theft at a rate of 47 percent. If you are operating a business with more than 100 employees, your chances are slightly improved and lack of internal controls is the cause of employee theft at a decreased percentage – 33.7 percent. Regardless of the size of your business, not having internal processes and procedures in place or adhering and/or enforcing them is the leading contributor to employee theft.
As a business leader you have total control over the internal procedures you have put in place and the processes that you follow day in and day out. We see our margins decreasing yet we elect to do little about enforcing our existing control or improving our internal controls. Shame on us!
But what are some of the reasons why businesses do not put sufficient emphasis on internal controls? We have good intentions by implementation processes and procedures to protect our businesses but if we don’t enforce them sufficiently, we are making idle threats and employees may not take us seriously. By drawing a line in the sand and making a stand on employee theft issues, we send a clear message to our associates indicating that employee theft or lesser violations will not be tolerated under any circumstances.
Other times we may get so busy with running our businesses which makes it hard for us to enforce our own procedures. Unfortunately those are the times that we may be faced with another serious employee theft investigation or a series of employee theft instances. Want to bring employee theft under control once and for all? Make your line in the sand a granite wall with no compromise that the waves will not affect.
We know from long experience in the loss prevention field that there are many reasons that employees steal. Some of those reasons involve greed, want or a need of some kind. We as employers can do little to effect the reasons except to do the best we can to screen out potential problems such as candidates with poor criminal histories; candidates that have a poor credit history who may be handling our money and drug abusers top the list.
For more information about employee theft contact us or call 1.770.426.0547 – Atlanta Georgia
If you have been lucky enough and attended basic accounting 201 and 202 classes, you will be very familiar with the words “dual control”. Everything related to financial transactions is subject to dual control. This means you should incorporate processes and procedures into your daily accounting function that does not give total control over your accounts receivables and accounts payables into the hands of one person.
Your business may not be large enough to have multiple employees who work in your accounting/book keeping department. Therefore you will most likely have one person “Your Book Keeper” who creates invoices being sent to your customers, receipts the cash, check or credit card transactions from your customers for payment of these transactions, reconciles your checking accounts, your credit card statements, orders supplies, orders inventory parts and then pays for the parts and the supplies. Maybe this person also handles the payroll and pays expense reports. Now, one thing he/she probably doesn’t do is sign the actual checks. Well, good for you since at least you have one control in place.
If this description of your book keepers job description matches one that you currently deploy, trouble is brewing on the horizon. But why do you care since you are still drawing a pay check. Oh but wait, this is your company, you are responsible for everything in the end. But you as the owner of this small company are so busy with networking, generating sales leads, managing your operations, dealing with unhappy clients, exploring new business opportunities you couldn’t possibly spend time supervising your book keeper too. Besides, Mary Beth has been with your company for the last 5 years. She has always done an excellent job.
But today is the day when you will receive that call from a customer who doesn’t understand why you have run his credit card multiple times for a transaction. Or maybe the bank calls and tells you that your account is overdrawn. Or your vendor contacts you about unpaid invoices. Or you apply for a loan and you need to provide financial statements but the numbers don’t add up.
You realize that something is not right and the need for an internal theft investigation has arrived. Although you are good at what you do in your business, you don’t know how to even begin to conduct an internal theft investigation. So what is the first thing you need to do to un-do these events and get to the bottom of this situation? An internal theft investigation will include quietly compiling evidence of any fraudulent transactions, controlling your emotions and obtaining professional help.
For more information about internal theft investigations, contact us or call 1.770.913.2467 – Atlanta Georgia
When considering starting your own business, you need to make decisions about a number of things, i.e. type of ownership, financing, location of your business, retail space, pricing, merchandising, advertising, marketing, staffing, etc. The list is long and at times seems endless. You keep referring back to your business plan, update and modify the plan to keep it fluid and up-to-date.
The time to open your retail business has finally arrived, the store is fully stocked, your staff has been hired and is in place ready to assist your customers. You have a good accountant and a good banker on hand. You are full of hope and enthusiasm. After your store has been open, you begin to review your sales and your net profit on a periodic basis.
Your marketing strategy is working well and your sales are above average, however, you cannot figure out why your net profit is not keeping pace? If your average merchandise item is selling for $15 and your net profit margin is 15 percent, you should clear $2.25 on each item you are selling. You just placed another order of merchandise amounting to $15,000. Your total sales thus far should be about $100,000 with a net profit of $15,000, however, your numbers don’t add up. When you compare the inventory you originally purchased, subtract the total items sold, the remaining balance does not match your inventory count. This difference is called inventory shrinkage.
You realize that you need to keep an eye on the inventory shrinkage totals. You are trying to figure out how your inventory loss of 100 pieces of inventory can be explained and/or eliminated. Some items were damaged and needed to be written off. But even after having made this accounting adjustment your inventory shrinkage is still high. Why is that? Then you realize that the inventory shrinkage can only be attributable to shoplifting or employee theft. Having lost 85 pieces of merchandise to thieves has affected your bottom line. If you had sold these 85 pieces, you could have earned an extra $191. Now you are faced with having to make up this inventory shrinkage by having to sell an additional 38 pieces of inventory just to break even.
Then you realize that your business plan did not include an anti shoplifting strategy. Where do you turn to learn about retail theft prevention? Granted you only lost $191 in net profit, you still had to pay for the merchandise and thus your cost of goods keeps increasing. An anti shoplifting strategy can incorporate contacting a loss prevention consultant and contracting for consulting services to help you understand your choices in putting an anti shoplifting strategy in place. One should start very early to the cycle of a new or existing business to implement the proper anti shoplifting policies and procedures.
For more information, contact us at anti shoplifting or call 1 770 426-0547.
