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INTERNAL CONTROLS


If An Employee Steals $100 from you
it will take $2000 in Sales to make up for the loss.

If you are operating at a 5% net profit, it will take $2,000 in extra sales to make up for the $100 profit the employee stole from you. As your net profit percent goes down, the amount of sales required to make up for the lost profit dollars increases. For example, at 3% net profit it would take $3,333 in extra sales and at 1% net profit it would take $10,000 in extra sales.

You have worked very hard on your store (buying, merchandising, advertising, selling, hiring, etc) and it is only natural that you want to reap the fruits of your labor. But, did you know that your profits could be literally walking out the door due to lack of good internal controls and procedures?

A study done in 2002 by the National Security Survey showed that of all shrinkage,

  • 48% was due to employee theft
  • 32% was due to shoplifting
  • 20% was due to vendor fraud and administrative error

Since so much of shrinkage is accounted for by employees, it just makes sense to remove as many opportunities as possible. If you have employees you need to be concerned.

Click here to order your copy.

Only a small percentage of people are totally honest, only a small percentage of people are inevitably dishonest. The majority of people (employees and customers) are basically honest. However, basically honest people will steal. There are three requirements to be satisfied before a basically honest person will steal:

  • a serious need, such as desperate for money
  • a risk-free opportunity
  • being able to rationalize that it is OK

As a store owner you can not do much about #1 and #3 but you can and must do something about #2 - - eliminate any risk-free opportunities in your store. This is where internal controls and good procedures come into play. Well-defined and written policies and procedures will eliminate most opportunities for theft.

Theft will never be 100% eliminated from the retail environment. Your goal as store owner should be to minimize it as much as possible. The first step to take in setting policies and developing procedures to combat this problem is to recognize the weak areas in your store. With that goal in mind we have developed a questionnaire for the independent retailer that can be used for this purpose. This is based on my years as a retail controller in a 5-store chain and 20+ years consulting with The Retail Management Advisors working with 100’s of retailers throughout the country. As you use the questionnaire to review your current procedures, any NO answer indicates a possible weakness that needs to be addressed.

As a store owner, you are very busy so we have set up the manual in such a way to make it easy to complete the project a little at a time. We have left lines for you to enter the date you completed each section so it is easy to see what areas have been reviewed and which still need to be done as you go through your store.

ABOUT THE INTERNAL CONTROL MANUAL

  • Comprehensive questionnaire developed specifically for the independent retailer.
  • Based on years of experience working as Controller for an independent retailer and working as consultant with hundreds of retailers throughout the United States.
  • 84 pages covering all aspects of a retail store, from the sales floor to the back office.
  • Divided into logical sections to make it easy to concentrate on one area of the store at a time.
  • Table of Contents has place to enter date that section was completed to make it easy for busy retailers to see where they left off on their project.
  • Easy Yes / No answers with a No answer indicating need for improvement.

See below for a sample section on petty cash handling.

     
Management
Employees
   
Responsible
Person
Yes
No
N/A
Yes
No
N/A
A2.
Is there an established maximum amount for individual cash disbursements from Petty
Cash fund?  
________ _____ _____ _____ _____ _____ _____
  If yes, how much? __________              
                 
A3. Are payees required to sign vouchers or provide receipts for all cash disbursements? ________ _____ _____ _____ _____ _____ _____
                 
A4. Has someone been assigned responsibility for the fund? ________ _____ _____ _____ _____ _____ _____
                 
A5. Is the Petty Cash fund reconciled & reimbursed at least monthly? ________ _____ _____ _____ _____ _____ _____
                 
A6. Does someone other than the person with day-to-day control handle the reconciliation and reimbursement? ________ _____ _____ _____ _____ _____ _____
                 
A7. Is the fund audited at random, unannounced times (to verify the balance and to make sure employees do not have IOU's or checks that are being held)? ________ _____ _____ _____ _____ _____ _____
  How often?_______________              
                 
A8. Is supporting evidence (receipts/vouchers) effectively canceled at the time of fund reimbursement to preclude their re-use? ________ _____ _____ _____ _____ _____ _____
                 
A9. Is management given the supporting evidence (receipts / vouchers) when presented with the fund reimbursement check? ________ _____ _____ _____ _____ _____ _____
                 
A10. Are employee advances prohibited from the petty cash fund? ________ _____ _____ _____ _____ _____ _____
                 
A11. Are employee post dated checks prohibited from being cashed from the petty cash fund? ________ _____ _____ _____ _____ _____ _____

To have a consultant come into your store to do this analysis and review for you would take 2-3 days and cost at least $3,000 - $4,500. You, however, can get the knowledge of an experienced consultant for just $89 by ordering this manual and doing the review yourself.

PLACE YOUR ORDER

PRICE: $89.00 + $6.00 shipping and handling (Priority Mail)

For regular mail service, send your check for $95 made payable to
The Retail Management Advisors to:

Internal Controls
The Retail Management Advisors
510 Red Oak
Allen, TX 75002

OR

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PRICE: $89.00 + $6.00 shipping and handling (Priority Mail)

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