In Jack L. Hayes’ book “Business Fraud – From Trust to Betrayal” he states “Multiple-tasking, thoughtlessly applied, may allow one employee to control every stage of a particular work process. Whenever one employee is in such a position, he or she is provided opportunity to conceal dishonesty.” In addition, he also states in his book, “Anytime a trusted employee – whether that person is a bookkeeper, accountant, clerk, manager, or senior executive – is carrying out two or more high-risk functions that involve vendor authorizations, product receipts, payables, receivables, deposits, payroll, or other vulnerable fiduciary responsibilities, the organization is at significant risk of internal fraud.”
If you peruse the newspapers on a daily basis you will find multiple accounts of a “trusted” employee committing theft/fraud. No company (retailer, school, little league, church, non-profit, manufacturer, distributor, etc.) is immune to losses when you have an employee performing “multiple tasks”.
Within the retail environment we find many “multiple tasks” thefts taking place with some of the most common being:
- At the POS, refunds and voids are both processed/issued and approved by the same employee. There is no ‘second person’ approval required.
- In the back room, the person who picks-up/collects the trash also disposes of the trash. There is no ‘second person’ conducting a thorough review of the trash before it is removed from the store.
- With delivery/transfer items, the same employee who pulls the product from stock, also delivers the product with no ‘second person’ check of the item(s) taking place.
- In the stockroom or warehouse area, the employee who counts/signs-for the receipt of merchandise, does so without a ‘second person’ count- verifying the shipment.
- The management person who prepares the daily deposit, also makes the deposit and validates the deposit. There is no ‘second person’ verifying the accuracy of the deposit or deposit’s validation.
- In the home office, the person who prepares the check also signs the check. There is no ‘second person’ verifying the legitimacy of the supporting documentation for the check’s issuance.
- In the home office, the person is able to approve their own expense report without a ‘second person’ review / approval.
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A few recommendations when addressing “multiple tasks” with your location.
- The control over multiple tasks should have nothing to do with the individual employee, but with that employee’s position. You must concentrate on the position and depersonalize the process.
- In those locations with limited staffing which prevents the ‘second person’ approval/verification process from taking place on a consistent basis, unannounced audits or checks should be implemented. Also, the use of CCTV can be very beneficial in these circumstances.
- Never exclude management from your “multiple task” controls. In the event a manager is the one having to perform the refund, trash removal, or pulling product for delivery or transfer, a second employee should verify the accuracy of their task.
The bottom-line is: If you remove the opportunity, you can prevent the theft! $