By Mark E. Kashgegian, CPA
Employee theft is defined as any stealing, use or misuse of an employer’s assets without permission. While it is painful to think that a team member might steal from your business, studies show that employee theft accounts for over 40% of lost revenue. Therefore, it is a topic we simply cannot ignore.
In a cash business like a McDonald’s restaurant it is important that you pay attention to how money is handled on its journey from the register to the bank. There are numerous opportunities along the way for someone to help themselves to a little extra – or a lot. The perpetrators are not just confined to those who handle cash on the front end, but can also be back office employees.
We have developed a list of common ways theft may occur in a McDonald’s. Take a close look at your own operation to see if, at any of these critical points, losses are occurring.
- Free food given out at registers and drive-thrus
- Skimming from the register or the daily receipts
- Ringing up a cash sale and voiding it immediately, and then taking the cash
- Phantom cash register or taking sales during register tape changeover
- Stealing deposits
- Holding deposits for days to use the money and then making the deposit later
- Stealing money from safes
- Phony pay-outs from petty cash
- Bookkeeper creates fictitious vendors and writes checks which they cash
- Bookkeeper writes and cashes checks to themselves but records them as going to a vendor
- Bookkeeper writes duplicate checks and deposits them through their ATM (ATM machines do not verify the accuracy of “Payee” on the check)
- Outstanding checks in the same amount may indicate fraud
- Outstanding checks older than 60 days may indicate fraud
- Writing paychecks to “phantom” employees
- Manager adds fictitious hours to an employee’s paycheck and splits the difference
- Employee takes a picture of their payroll check with their cell phone and deposits it into their account through mobile banking
- Stealing food or other supplies from storage
Cash handling and deposits offer the fastest and easiest way to steal. They can be difficult to track and hard to quantify. Deposits in particular can lead to significant losses because of the amount of money involved. Cash should be deposited into the bank daily if possible, and there should never be outstanding deposits of more than one or two days.
No Owner Operator wants to believe they can be victimized by their own staff, and we hope it never occurs in your McDonald’s. But it is better to be safe than sorry. Keep a close eye on the critical points outlined above, and never ignore your instincts if you sense something may be wrong. Look into any unusual circumstances immediately.
Identifying and preventing internal theft is also a function of strong internal financial controls. Gray, Gray & Gray can help by testing internal controls within your organization to detect any weaknesses or gaps. Please contact our office at (781) 407-0300 if you are interested in learning more about a review of your financial controls.