Guarding Against Employee Theft Is a Must

By Dianne Wells

Auto Dealer Advisor, 2005 Winter 

Don’t worry about employee theft; it will never happen at your dealership, right? Hold that thought.

Some studies indicate that 12 percent of employees admitted to stealing in 1964. By 1985, 32 percent admitted employee theft.

“OK,” you say, “But those statistics don’t have anything to do with me.

“Really?

For the five-year period ending in 1993, 50 percent of all dealerships experienced theft. During the last five years, 80 percent of all dealership employees stole something.

There’s your out, right? They stole “something.” It was probably paper clips or pens.

Maybe it was, maybe it wasn’t. When all that stealing is averaged out, though, it comes to $9 per employee per workday. For a dealership employing 100 people, that amounts to more than $234,000 a year.

So, just in case your dealership might be affected, here are some ways to upgrade your internal controls.

Dealership Income

• After-hours receipt of cash and checks should be handled from a separate receipt book. The person responsible for this book should be required to account for all money received and all numbered receipts as soon as the office re opens.
• Only one person should have access to each cash drawer and strict accountability should be maintained.
• Put a sign above the cashier’s window saying, “Ask for your receipt.”

Cash Disbursements

• The dealer should sign all petty cash vouchers when the fund is reimbursed.
• All customer refunds should be documented and cross-referenced to the original sales document. They should be signed by the customer and by the manager authorizing the refund.
• Bank statements should come to the dealer unopened. The dealer should review all canceled checks for any unusual items. In today’s electronic age special attention must be paid to all EFTs. Remember it no longer takes a check to get money out of the bank. Know who is authorized to approve.

Account Reconciliation

• See that small clearing accounts are kept current (e.g., licenses and title, insurance payables, vehicle payoffs and payroll tax withholdings).
• Bank accounts should be thoroughly reconciled timely with each statement by a person who has no access to cash.
• Technician pay accounts must be carefully reconciled against service department income and write-off accounts.