Forensic Accounting For Dummies
Restaurant Internal Controls
Jason Kaplan CEO of JK Consulting
Theft is that thing that we know occurs but we hate to admit that it has happened to us. In my 16 years in the restaurant industry, I have seen the dark side of the business world. The restaurants’ biggest enemy was, in fact, themselves; they grew like a cancerous root until theft became widespread. The best theft operations are those that are small and stay small. They don’t alarm management and are kept between few employees therefore, limiting the liability of chatter amongst employees; the chances of being caught are small.
The right offense is the best defense. How would you steal? This is the question I ask clients and it often surprises them. If you want to put the best possible internal controls in place, you must recognize the places where you are weak.
So you spent all the hard work and effort to create a thick binder employee manual. Congrats! However, you just wasted a lot of time! Did you really read your employee manual cover to cover? Many employees use such binders to make a great door stop. Focus in on the important aspects of training, policies, and procedures and then you will thank me later. Drill important topics into their heads and make sure they read them.
In the Purchasing & Receiving Department, I once discovered the purchaser was putting his groceries on the restaurants tab. This could have easily been avoided had someone took the time to review it.
Access to the food and wine is like access to a vault in a bank. Keep locks on them!! Remember that the Chefs and Cooks handle food and work with machinery while the Bartenders & Servers handle liquor and wine. So be careful!
A dishwasher would always volunteer to take out the trash. Why? Well he wound up throwing away perfectly good meat and cheese in a trash bag; when the restaurant closed, he would then make his own doggy bag!
Bob the server was waiting on a table of 18 customers. They were all businessmen out to have a great time and they did. After 8 bottles of wine and several cocktails, they received the check. Little did they know that they were being charged for 10 bottles of wine. The server was putting on extra bottles of wine, being tipped on them and then taking them out the side entrance of the restaurant to become part of his wine collection.
Remember, if it’s not nailed down it can be stolen!
Follow the Money:
If you want to set up and/or check the internal controls of a restaurant, you need to see where the exchanges are taking place and how they are managed. The more hands involved, the more the liability. Most customers use credit cards and therefore, it has made it harder to steal cash; yet, it still does occur. Don’t forget identity theft is something new and credit card numbers are everywhere.
Things can be put on a check as easily as it can be taken off. Items can be customized and are often overlooked. A computer system is only as good as the individual that is using it. Take the time to go over the customizable reports; don’t be lazy.
These are just a few of the many things you must look at. Unless you understand the nature of the business that you are looking at, you can’t and won’t find the fraud and/or theft that are occurring. So, take your blinders off and go get them!