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An ounce of prevention: Steps to overcome employee theft

November 23, 2010
Estimates by dealership accounting firms indicate that upwards of 25 percent of the nation's 19,000 franchised dealers suffer some type of theft by employees each year. It might be impossible to eradicate, but there are common- sense actions that management can take to minimize opportunities for tempted employees. 1. Make sure dealership checking accounts are reconciled at least monthly. 2. Assign someone other than the accounts payable or accounts receivable clerks to do the bank reconciliation. 3. Assign different people to the accounts payable and accounts receivable functions. The person who sends out the bills should not be the same person who processes checks that come to the store. 4. Account for all missing or voided repair orders at least weekly. 5. Require all employees to take at least one full week of vacation each year. 6. Maintain a list of approved used car wholesalers. Conduct a monthly review of wholesalers you do business with and eliminate any who cost you money on a regular basis. 7. Insist on a neat and orderly parts inventory. Access to the inventory should be limited to parts department employees and the service director. 8. The general manager or controller should conduct a daily review of cash transactions. Match all bank deposits against customer receipts. 9. Limit check signing authority to the dealer/principal, general manager and controller. 10. Computers allow for new ways to move money, but they also provide some good audit tools. Talk to outside accountants about installing some detection measures. 11. Consider purchasing an employee fidelity bond, a relatively inexpensive insurance policy for coverage of a major loss.