Internal Theft Prevention
All businesses suffer from some form of internal theft. It is estimated that 75–80% of all theft that occurs in a business is employee theft. The remainder of the loss comes from shoplifting. This statistic shows that a higher concentration of prevention should go towards internal theft.Methods of Internal Theft
There are several different ways to commit the crime of internal theft. Below is only a short list of examples of different methods.
- Employees may hide merchandise or goods either on their person or in a handbag, lunch box, backpack, or briefcase and take it out of the business during a break in their shift or at the end of shift.
- Employees may remove equipment or merchandise from the building in the trash and retrieve it later.
- Employees may give employee discounts to friends or family members.
- The employee may overcharge customers and pocket the extra money.
- Checks may be issued and cashed for returned merchandise not actually returned.
A business should put together policies and procedures to lower the possibility of internal theft. Below is list of prevention strategies for internal theft.
- Develop a purchase policy that specifies how employee purchases are to be processed. Do not allow employees to process their own sales.
- Provide lockers for employees and develop a policy stating that employees may not take personal articles such as purses, backpacks, lunch boxes, and briefcases into merchandise areas.
- Restrict employees, in non-emergency situations, to a single monitored exit.
- Number refunds and keep control over refund books.
- Develop a policy regarding trash removal. Use transparent trash bags. Flatten all trash cartons and boxes. Spot check trash containers.
- Perform random checks of employees and employee areas.
- Do not permit truck drivers to load their own vehicles without inspection or supervision.
- Develop strong audit controls by outside auditors and inventory all supplies, equipment, and merchandise regularly and often.
- Develop and maintain an effective access management policy for all keys.
- Have returned merchandise inspected by someone other than the person that made the sale.
- Limit the amount of cash allowed to accumulate in a cash register and make unannounced counts on registers.
- Bookkeepers should not be responsible for shipping and receiving merchandise. Purchasing should not be involved in any aspect of accounts receivable or the receipt of merchandise.
- All cashbook entries should be checked against cash on hand at the end of each day.
- Perform audits of blank checks, order forms, payment authorizations, vouchers, receipt forms, and all other forms which authorize or verify transactions.
- Employees responsible for preparing payroll should not be involved in its distribution.
- Require that all customers receive a receipt.
- All prospective employees should have a criminal and prior-employment background check done on them.
- All inventory shortages should be immediately and aggressively investigated.