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Avoidable $500,000 embezzlement

August 16, 2018

The front page of Tuesday’s NY Post told about two sisters that allegedly stole a half million dollars over five years from a school cafeteria. The article indicated this might have been going on for as long as fifteen years. I believe all such thefts could be avoided.

Let’s get something straight. Thefts cannot be stopped if someone wants to steal. But they can be caught early on with the right controls that are looked at. Further the knowledge of being caught quickly will also serve as a deterrent. What is needed is an understanding of the system by the person in charge and a regular review of the data generated by that system. Even a bad system can still be effective if the output is looked at timely and understood by the boss or the people that are ultimately responsible.

There are a number of ways this would work. What is needed is a consistent method of recording transactions; a benchmark to measure the results against; a recognition of digressions from the normal trends; percentages not synced with the standard ratios; and an understanding of what the aggregate transactions represent. An example in the case of a cafeteria is total daily sales being matched against the meals served to the total number of customers to determine an average customer check; some of the larger selling entrees being compared to the quantity purchased; and a requirement that all sales be recorded on a customer check and in a cash register. While each business is different, each has characteristics that can be measured to control performance and adherence to the system.

This example is about a school cafeteria, but the point here applies to every type of business and operation. You need a system that can control activities and provide needed information timely and it needs to be done in a manner that is a deterrent to fraud and embezzlement. Further, and most importantly, no system can be effective if the reports and data generated aren’t reviewed. And it is the review will make almost all thefts avoidable.

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