Employee Theft Cont'd
Often when I spend time in a store I hear new stories of employee theft. It usually seems that the people that can cause the most problems are managers and bookkeepers. If they are the same person or they are good friends, the possibilities for theft go way up. In what follows are the latest cases that I heard about.1. In this case the manager and bookkeeper were good friends. Company policy required that the bookkeeper monitored all returns. The returns were stored on a shelf until the bookkeeper checked them in. The store owner had confidence in the bookkeeper since she always caught any of his mistakes. However, the manager and bookkeeper were good friends. She somehow missed hundreds of dollars a week in fake returns by the manager. The bookkeeper was out sick for an extended time. A temporary bookkeeper immediately noticed the fake returns and that ended the fake returns.
2. In the next scheme the manager authorized that some stock was drop shipped to an associate's home address. The manager authorized the paying the bills. Once this scheme was uncovered, it was assumed that the manager retrieved the drop shipped items and sold the items.
3. This third scheme was clever. The manager cashed checks in the store. The checks all bounced but the manager picked up the mail and removed the bad checks from the envelope. The accountant and the bank assumed that the owner knew about the bad checks so nobody bothered to point it out to the owner.
4. This last scheme was a mistake but uncovered the potential for theft. The owner was very busy and did not have time to take some deposits to the bank. He tossed them in the file cabinet and locked it. A couple of weeks later somebody was looking for something in the file cabinet and noticed the bags with the deposits. They had a company policy that required them to check to make sure the deposit slip matched the end of day report from their computer. However, they did not check to make sure that the amount deposited matched the deposit slip. A manager or bookkeeper could have made a second deposit slip leaving out some of the cash and used that second deposit slip for the deposit. Unless there is a check that the amount deposited in the bank matched the end of day computer report, there is a potential for theft. This same check would have spotted the theft in 3. above.
One thing that is not exactly theft but can cost the store owner dearly is employees that give their friends a good deal. The good deal can either be reduced selling prices or selling items tax exempt. Owners often watch selling prices but sometimes can miss tax exempt sales. You should carefully check your daily or monthly summary reports on your Store POS System and look for cash nontaxable sales. That is the first thing that a sales tax auditor will look for during an audit. There is an obvious red flag if the sale is cash to a regular charge customer.
Once you uncover theft in your business and you send the thief on their way, you face another problem. You can't report theft to some future employer that calls about the employee involved in theft because in many cases you can't prove it beyond a reasonable doubt. One crafty store owner said that he tells employers looking for a recommendation that he can't discuss that employee without talking to his lawyer.
Labels: bad checks, bookkeepers, deposit slips, drop ships, employee theft, fake returns, managers, recommendations, tracking changes in Store POS System data
posted by MIB @ 7:30 AM
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