EARLY WARNING SIGNALS OF INTERNAL DISHONESTY
By R. L. Lesnick
1. Discrepancies between inventory records and physical counts.
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.
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.
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
Copyright: 2005, R. L. Lesnick, Gamma Investigative Research, Inc.