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Casual Articles - Internal Control - The Why and How
Whether you have a business idea or not, here’s what I want you to do…I want you to take a pen and paper and go and sit somewhere quiet in your home where you will not be distracted. Get comfortable. Take a deep breath and relax for a moment.Now I want you to write down everything you WANT in life. That’s right. Everything that you wish you had in your life. It might be a new car, a house with a walled garden, some new and beautiful clothes, a swim with the dolphins, an arctic cruise, new watch, the latest Laptop, whatever… Just write it down. At least twenty-five things, but it could be twenty pages long.Spend some time writing down everything that you could want in this life and desire. You can also write down things that you WANT in your relationships with other people. Such as “love”. You can think about the kind of rela
If you are wondering if your internal controls are adequate, following is a sampling of several common control procedures and why they are important.
If handwritten sales slips are being used, they should be numbered and all numbers should be accounted for in the office. This helps prevent employees from destroying cash sales slips and pocketing the money. It also helps to prevent the inaccuracy of sales, inventory
Are you considering the possibility of opening a dollar store? If so, then learn everything possible from your competitors. Spend a little time examining the competition before, during and after you conduct your grand opening event. Visit direct competitors as well as stores that will overlap with your store for customers.Learn what your direct competitors are doing. Start with competitors in the immediate area of your store. Then work your way away from your store in an ever-increasing area. Be sure to include well known and larger stores even if they are well away from your operation. These bigger players can have a huge impact on you when you are opening a dollar store.Find out about products that are carried, special promotions that might be going on, methods for displaying merchandise, as well as the general operation of thei
Why should you be interested in establishing and maintaining sound internal controls? Good internal controls help ensure the accuracy, completeness and validity of information. They help to prevent anyone from deliberately tampering with information and also help prevent employee dishonesty. Internal controls do this by building checks and balances into your procedures and record keeping system.
What happens when internal controls are lacking? Following are several examples of actual incidents where we were called upon by retailers after they discovered occurrences of internal theft.
The store manager who was "transferring" merchandise from one store to another. In fact, he was diverting the merchandise for his own use.
The bookkeeper who "adjusted" her own charge account so she was getting her merchandise free.
The salesperson who processed cash refunds using fictitious names and pocketed the money.
The cashier who destroyed cash sales tickets and pocketed the cash.
The bookkeeper who used company checks to pay her personal bills.
The receiving clerk who helped himself to new merchandise that had been received.
The above examples resulted in losses to these retailers ranging from several thousand dollars to fifty thousand dollars. In all these instances, good, sound internal controls were either lacking or not being enforced.
The above examples emphasized internal theft; however, lack of sound, well-enforced internal controls can also result in other problems for the retailer. For example, without them the following can occur:
Vendor invoices paid twice. This not only reduces cash but overstates book inventory and results in shrinkage.
Inaccurate management information resulting in wrong decisions being made.
If charge sales or payments are posted to customers accounts incorrectly you run the risk of losing valuable customers.
How difficult is it to institute a system of good internal controls in your store? It does not require excessive amounts of extra work and time to put good them in place. Many controls are very easily established with only minor changes to the existing procedures. The hardest part is actually identifying all the areas where internal controls are lacking. While the store owner is the person most familiar with the store's operations, many times it takes the review of a retail specialist to identify the areas where internal controls are needed.
If you are wondering if your internal controls are adequate, following is a sampling of several common control procedures and why they are important.
If handwritten sales slips are being used, they should be numbered and all numbers should be accounted for in the office. This helps prevent employees from destroying cash sales slips and pocketing the money. It also helps to prevent the inaccuracy of sales, inventory a
Why choose from the best culinary schools? It seems as though there's a restaurant on every corner these days. They cater to every taste: fine dining, casual, ethnic traditions, even vegetarian and organic fare. The affluent baby boomers are into leisure time and travel, both of which mean eating out, and in this age of the global village, more and more people are traveling on business. In the competitive food service industry, a restaurant's reputation can rest on the skills of the chef - learning your skills from the best school will make you one of the chefs that a restaurant owner will stake his or her reputation on.The best culinary arts school will teach you much more than the basics. You'll learn the secrets of cooking great food as well as restaurant management, small business ownership, catering, and other specialized knowledge a
What happens when internal controls are lacking? Following are several examples of actual incidents where we were called upon by retailers after they discovered occurrences of internal theft.
The store manager who was "transferring" merchandise from one store to another. In fact, he was diverting the merchandise for his own use.
The bookkeeper who "adjusted" her own charge account so she was getting her merchandise free.
The salesperson who processed cash refunds using fictitious names and pocketed the money.
The cashier who destroyed cash sales tickets and pocketed the cash.
The bookkeeper who used company checks to pay her personal bills.
The receiving clerk who helped himself to new merchandise that had been received.
The above examples resulted in losses to these retailers ranging from several thousand dollars to fifty thousand dollars. In all these instances, good, sound internal controls were either lacking or not being enforced.
The above examples emphasized internal theft; however, lack of sound, well-enforced internal controls can also result in other problems for the retailer. For example, without them the following can occur:
Vendor invoices paid twice. This not only reduces cash but overstates book inventory and results in shrinkage.
Inaccurate management information resulting in wrong decisions being made.
If charge sales or payments are posted to customers accounts incorrectly you run the risk of losing valuable customers.
How difficult is it to institute a system of good internal controls in your store? It does not require excessive amounts of extra work and time to put good them in place. Many controls are very easily established with only minor changes to the existing procedures. The hardest part is actually identifying all the areas where internal controls are lacking. While the store owner is the person most familiar with the store's operations, many times it takes the review of a retail specialist to identify the areas where internal controls are needed.
If you are wondering if your internal controls are adequate, following is a sampling of several common control procedures and why they are important.
If handwritten sales slips are being used, they should be numbered and all numbers should be accounted for in the office. This helps prevent employees from destroying cash sales slips and pocketing the money. It also helps to prevent the inaccuracy of sales, inventory
Whether you call it a management methodology, approach, style, manner, way or even a system, if it lacks one aspect it will not be effective.If you are leading a team or department you are to communicate your tactics. You must tell either how you want activities organized or what the results should be. If you are combining both, people will wonder: “which one is the most important”. If you will not choose, others will choose for you. Yet others, being a team of twenty employees, might make their own choices. And all those choices added up will most certainly lack coherence.They credited George Soros for cracking the bank of England in 1992. But was it really on his account (only) that the European Monetary System (EMS) fell apart? Excuse me for bringing up such an old history, but history appears to repeat itself sometimes. Credibi
The bookkeeper who used company checks to pay her personal bills.
The receiving clerk who helped himself to new merchandise that had been received.
The above examples resulted in losses to these retailers ranging from several thousand dollars to fifty thousand dollars. In all these instances, good, sound internal controls were either lacking or not being enforced.
The above examples emphasized internal theft; however, lack of sound, well-enforced internal controls can also result in other problems for the retailer. For example, without them the following can occur:
Vendor invoices paid twice. This not only reduces cash but overstates book inventory and results in shrinkage.
Inaccurate management information resulting in wrong decisions being made.
If charge sales or payments are posted to customers accounts incorrectly you run the risk of losing valuable customers.
How difficult is it to institute a system of good internal controls in your store? It does not require excessive amounts of extra work and time to put good them in place. Many controls are very easily established with only minor changes to the existing procedures. The hardest part is actually identifying all the areas where internal controls are lacking. While the store owner is the person most familiar with the store's operations, many times it takes the review of a retail specialist to identify the areas where internal controls are needed.
If you are wondering if your internal controls are adequate, following is a sampling of several common control procedures and why they are important.
If handwritten sales slips are being used, they should be numbered and all numbers should be accounted for in the office. This helps prevent employees from destroying cash sales slips and pocketing the money. It also helps to prevent the inaccuracy of sales, inventory
Recently, I walked over to my bank for what I hoped would be a quick transaction, and felt I was in luck as one of the five tellers had only one person in her line, while the others all had two or three. So I headed for that teller. Big mistake. The customer being helped obviously had some sort of problem, and the teller moved back and forth taking care of it. And of course, I was afraid to change lines, for fear of getting in an even slower one. As I have so many times before, I wondered why this bank doesn’t have the more customer-friendly system of “next available teller” queuing. This time I decided to seek out the manager.I was not surprised to hear he was busy, and could I wait? Another waste of my time. When I did give him my suggestion, he listened, then started explaining why this system would not work in this bank. “Not enough s
Inaccurate management information resulting in wrong decisions being made.
If charge sales or payments are posted to customers accounts incorrectly you run the risk of losing valuable customers.
How difficult is it to institute a system of good internal controls in your store? It does not require excessive amounts of extra work and time to put good them in place. Many controls are very easily established with only minor changes to the existing procedures. The hardest part is actually identifying all the areas where internal controls are lacking. While the store owner is the person most familiar with the store's operations, many times it takes the review of a retail specialist to identify the areas where internal controls are needed.
If you are wondering if your internal controls are adequate, following is a sampling of several common control procedures and why they are important.
If handwritten sales slips are being used, they should be numbered and all numbers should be accounted for in the office. This helps prevent employees from destroying cash sales slips and pocketing the money. It also helps to prevent the inaccuracy of sales, inventory
Always tell the truth, no matter what it costs you.My father taught me that. It's fantastic advice. Not everybody takes it, though, and I certainly can't force you to.One of the places "truth issues" show up alarmingly often is on resumes.Lying on resumes is so common, at all levels, students to executives, that it's tough for potential employers to determine whether you're lying or not. But remember one thing before you even consider lying on a resume: You will be found out.How?Sometimes, a good interviewer will stumble upon the lie. You'll claim you're an expert in X, but you can't answer any questions about it. At that point, you'll be lucky if he doesn't throw you out.Sometimes it'll take a while to figure out you fibbed. Sooner or later, though, you'll be called upon to do something you claimed you
If you are wondering if your internal controls are adequate, following is a sampling of several common control procedures and why they are important.
If handwritten sales slips are being used, they should be numbered and all numbers should be accounted for in the office. This helps prevent employees from destroying cash sales slips and pocketing the money. It also helps to prevent the inaccuracy of sales, inventory and accounts receivable records due to misplaced or lost sales slips.
All transfers of merchandise from one store to another should be documented using numbered, 4-ply transfer documents. One copy of the transfer document is sent immediately to the office. One copy is kept in the sending store, one copy is sent by mail to the other store. The another copy is sent with the merchandise to the receiving store. The receiving store uses the transfer document to ensure they received all the merchandise. Once they have signed off, one copy of the receiving document is sent to the office where it is matched with the first copy. This ensures that all transfers are accounted for and recorded properly.
Cash refunds should always be a two-person transaction, with the store manager being the second person. Require the customer's signature, address and phone number on the cash refund slip to verify that they received the cash. Someone in the office should follow up on customer returns with a phone
call to the customer to make sure the customer was well treated in the store when they made their return. This also serves to validate the fact that the return was in fact made. Require that the customer's copy of the original sales slip be attached to the cash refund slip. Enterprising shoplifters have been known to try to obtain a cash refund by returning stolen merchandise. Also, if a customer wants a refund for merchandise paid for by check, a refund check should be mailed after sufficient time has elapsed to ensure that the customer's check will not be returned to you by the bank.
Checks should never be signed unless all the supporting documentation is there; then this documentation should be "canceled" in some manner so it cannot be used for another check. This is also a good time to check for discounts that were not taken or for credit memos that were not deducted.
One are in which employees can accomplish theft in wholesale quantities is in the receiving area. To prevent employees from putting boxes of merchandise in with the empty boxes from receiving so they can take it out for an accomplice to pick up later, keep the trash area separate from other areas in receiving so the store manager can easily check the trash at any time. You could also require that the empty boxes be broken down so no merchandise can be hidden in them. Clear plastic bags should be used to collect trash.
If you are using a computerized record keeping system, ensure that passwords are used wherever appropriate to prevent unauthorized persons from knowingly or inadverte
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