http://veterinarynews.dvm360.com/dvm/Expenses/Theft-prevention-Are-you-internally-controlled/ArticleStandard/Article/detail/666570?contextCategoryId=45464&ref=25
Summary
The article teaches business owners to prevent theft by doing clever internal control of assets in the company. The article lists 6 ways of internal control that can be used in many small and medium businesses. The first one is one to maintain, one to record. In any given situation, the more record-keeping duties that can be segregated, the better. If only one person is responsible for both maintaining the record and the asset, there are more opportunities for procrastination, abdication of the task or outright theft. Business owners or managers should determine the practice's acceptable level of risk. It is also management's responsibility to review practice operations contemporaneously and ensure that assets are used for the right purpose. Occasionally, discrepancies will occur, and they should be analyzed and reconciled. Other ways including Seeing is believing, Hold the line, and Ask away are useful, too.
Connection
If a business, especially a small business, doesn't have a proper internal control to protect its assets, it is the owner and the manager's responsibility to set up a strict policy to control its assets, especially cash and checks. In Chapter 6, we learned many useful methods including deposit cash daily, assigning different employees, and other methods. Out of all assets a business has, cash has the most problems. A business shouldn't keep a large amount of cash in the store because checks are almost the same as cash. You can pay you employees with checks, pay your bills with checks, and pay your tax with checks. Even though issuing checks could be costly, it safe and secure.
Inflection
Theft happens. We can't expect to catch them in the act every time. However, we can scare them away almost all the time. Outside theft are easy to deal with: couple of cameras, alarm system, and some securities can easily scare them away. Insiders are hard to deal with because you know them and they know you, plus they are hard to catch. Internal control helps us to prevent theft from our employees. Assigning different people for doing and checking reduces the possibility of a theft, and even the theft does happen, we can catch the guy sooner.
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I agree, we can't stop theft every time it happens and we can reduce the possibility of theft by having a proper internal control system. Although having a good internal control system is great, I think it's kind of like a double edge sword. The stronger your internal system is, the more money you have to invest in it, and the weaker your internal system is the higher chance you will be a targeted by theft. No matter what, a company will lose money to either theft or having security. Don't get me wrong, I think having a strong internal control system is great, but I think it can cause discontent with employees since they might feel distrusted by the company and are force to comply with the system even if it causes work to be less efficient.
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I agree with Sam’s point of view on theft prevention and internal control. All theft preventions are needed to maintain the company’s revenue because study has showed that 95% of the business will encounter company theft. Trust and communication between employers and employees are very important to a company. Maybe company should find out why employees have the incentive to steal from the company. Some might be they face financial debts, they think the company “owes” them the things they steal, and one of the most commonly seen is false claiming of revenue. The first step to address these issues is to educate the employees that they are given a certain amount of trust and if they choose to manipulate the trust then they risk to lose their jobs.
ReplyDeleteI agree with Sam's idea on theft prevention and internal control. I think it is important to have a well maintained internal control system but if company's spend a whole bunch of money on making it more efficient, there are still risks that goods can be stolen. I also agree with Tifanny's idea of trust in the company. Trust is a very important relationship that needs to be establish between a company and its employees. By having this relationship, it can prevent problems like employees stealing goods. Of course there is still that small risk of employees stealing, but there would be less. As Tiffany had said 'if they choose to manipulate the trust then they risk to lose their jobs."
ReplyDeleteI agree with Sam that an internal system is like a double edge sword. It either weak internal system, increase in theft and decrease in cost or strong internal system, decrease in theft and increase is cost. Both have their own PRO's and Con's. The size of a company also plays a role on the strength of the internal system. A small business like a corner market tends to lean towards a weaker internal system, since they aren't able to generate enough revenue to cover the cost. Big companies like Futureshop would lean towards a stronger internal control because the cost of a "high tech" internal control isn't much compared to the potential revenue they will be able to generate with their products. Employee theft are the hardest to deal with. I disagree with Tiffany that employers should educate employees that if they abuse their trust, they can potentially lose their job. The truth is that every employees know that theft = FIRE, but they still continue to do steal. The reason is human nature. Greed is within us. The only thing to do is to strengthen the internal control and hope that it limits the amount of employee theft.
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