EARLY WARNING SIGNALS OF INTERNAL DISHONESTY

By R. L. Lesnick
Gamma Investigative Research, Inc.
http://www.priveye.com

1.         Discrepancies between inventory records and physical counts.

  • Inability to ship out same number of units received because units are missing.
  • Controlled documents missing or out of sequence.

4.         Excessive number of "voided” documents.

5.         Decline in purchases by an employee.

6.         Shortage or overage in cash funds.

7.         Daily bank deposits do not correspond with receipts.

8.         Bad checks frequently accepted or approved by a particular employee.

  • Frequent need to replace tools, supplies or equipment, not consistent with normal wear.
  • Unusual rise in consumption of supply item.
  • Frequent payment for merchandise or material based on vendor's “proof of delivery"
    rather than normal receiving documents.

12.         Cost of raw materials per unit of production is higher than previous averages.

13.         Unexplained drop in gross profit percentage.

14.         Unusually high percentage of refunds, voids, or credits.

15.         Figures are different on original and carbon copies of a document, all should be prepared in one writing and should be the same.

  • Erasures, changes, pencil entries on documents which are not supposed to be altered.

17.         Unexplained alterations in inventory records.

18.         Documents not properly signed or counter-signed.

19.         Excessive use of substitute records because originals are lost.

20.         Employment application cannot be checked out.

21.         Same employee taking out the trash.

22.         Key personnel closing alone.

23.         Cashier working the register with an open drawer.

24.         Employee's friends always hanging around.

25.         Employee vehicles not parked in designated areas.

26.         Keys left unattended.

27.         Cashiers not closing register drawer after each transaction.

28.         Managements failure to report observances of cashiers violating company policy.

29.         Inconsistencies in company cashing procedures.

30.         Failure to abide by employee purchase procedures.

31.         Inconsistencies in handling of customer pick-ups.

 

R. L. Lesnick
Gamma Investigative Research, Inc.
P.O. Box 10981, Fairfield, NJ 07004
Licensed NJ GMT (Hrs Zulu) -5
(973) 227-1415 (800) 878-9393 Fax: (973) 882-0960
Domain: http://www.priveye.com http://www.priveye.net
E-Mail: / gamma@priveye.net / rll@priveye.net

Copyright: 2005, R. L. Lesnick, Gamma Investigative Research, Inc.
Used By NAIS with permissions.