Audit Control Methods

Loss prevention controls and procedures by themselves are not enough to protect your assets. Controls and procedures must be audited from time to time or they will break down. No loss-prevention control is stronger than its audit.

One effective auditing method is to commit deliberate errors. What will your people do if, for example, you see that more finished goods than the shipping order calls for reach the platform? Will the shipping clerk return the excess to stock? Will he or she try to divert it for personal use (perhaps in collusion with a truck driver)? Or will the clerk simply ship the order without ever knowing that the excess existed?

If the bookkeeper and the accounts receivable clerk are not dependable, alert, and honest, disaster can result. Check them by withholding an invoice from each of them and watching to see what they do. Will they miss the invoice? Will they realize that a missing invoice means lost revenue and call it to your attention?

Unannounced inspections are another excellent method of checking your preventive procedures. Such inspections are most effective during overtime periods or when the second or third shift is working. For example, one owner-manager popped up on the shipping platform after the second shift left. He noticed a loaded truck parked at the platform and ordered it unloaded. The cartons in the rear were legitimate deliveries, but he found the front half of the truck crammed with stolen goods. The checker, who was hired to see that such stealing did not happen, had gone to sleep and let the accommodating driver load his own truck.

Influence Employees

You should never underestimate your ability to influence your employees in the direction of honesty. Your use of good controls, stiff loss-prevention procedures, and cleverly located physical security devices are powerful reminders to employees that the boss does indeed care.

But controls and devices can be wasted if the owner-manager fails to set a personal example of honesty and conscientiousness. A personal example of high integrity by the boss is the most important step in demonstrating to employees that dishonesty is intolerable.

Such an example includes following the same loss prevention rules that apply to employees. For instance, the owner-manager should sign for items he or she takes from the stockroom just like any other person.

Keep Crooks Off Balance

The crooked employees who are the most successful at their "second trade" are the ones who test the system and are convinced that they can beat it. They can steal you blind. With every "score," their confidence increases and along with it their danger to the company. The best way to stop such crooks is to keep them off balance - keep them from developing the feeling that they can beat your system.

Here's an example of how one owner-manager keeps crooks off balance. When inventory shrinkage became a major problem, he made a loss-prevention survey. To help keep employees honest, he tightened certain existing controls and put in some new ones. He reduced the number of exits employees could use by half. He scheduled "unscheduled" locker inspections for the unlikeliest possible moments. Employees were no longer allowed to take lunch boxes or bags of any kind to their work stations. Package inspection procedures were tightened.

To date, this owner-manager has caught no thieves. But by simply tightening controls and adding a number of surprise elements to his loss-prevention maintenance system, he reduced his inventory loss drastically.

Don't Play Detective

Dishonest employees, working alone or in collusion with others, can find ways to beat the system no matter how theft-proof you try to make it. "Smart cookies" can devise ways to get away with substantial amounts of money, materials, or goods.

Owner-managers who suspect theft should not attempt to turn detective and try to solve the crimes themselves.

Even the best business owner may botch a criminal investigation because it's an area in which the average owner is an amateur.

When you suspect a theft, bring the police or a reliable firm of professional security consultants into the picture without delay. Where dishonest employees are bonded by insurance companies, ironclad evidence of theft must be uncovered before you can file a claim with the insurance company to recover your losses. Professional undercover investigation is among the most effective ways to secure such evidence.

Rules Can Help Reduce Pilferage

Employees who are caught stealing will be prosecuted. (Settling for restitution and an apology is inviting theft to continue.)

Rotate security guards. (Rotation discourages fraternizing with other employees who may turn out to be dishonest. Rotation also prevents monotony from reducing the alertness of guards.)

Never assign two or more members of the same family to work in the same area. (You can expect blood to be thicker than company loyalty.)

Key employees will be kept informed about the activities and findings of the person who is in charge of security. (Thus weak points in security can be strengthened without delay.)

Make a dependable second check of incoming materials to rule out the possibility of collusive theft between drivers and employees who handle the receiving:

No truck shall approach the loading platform until it is ready to load or unload.

Drivers will not be allowed behind the receiving fence. (Discourage drivers from taking goods or materials from the platform by the following devices: heavy-gauge wire fencing between bays, with the mesh too fine to provide a toehold; closed-circuit television cameras, mounted overhead so as to sweep the entire platform; and locating the receiving supervisor's desk or office to afford him or her an unobstructed view of the entire platform.)

At the loading platform, drivers will not be permitted to load their own trucks, especially by taking goods from stock.

Every lunch box, tool box, bag, or package must be inspected by a supervisor or guard as employees leave the plant.

All padlocks must be snapped shut on hasps when not in use to prevent the switching of locks.

Keys to padlocks must be controlled. Never leave the key hanging on a nail near the lock where a crooked worker can "borrow" it and have a duplicate made while he or she is away from work.

Trash must not be allowed to accumulate in, or be picked up from, an area near storage sites of valuable materials or finished goods.

Inspect disposal locations and rubbish trucks at irregular intervals for the presence of salable items when you have the slightest reason to suspect collusion between employees and trash collectors.

Everyone Requirements To be knowledgeable about the Decision Making Process. We all rely on advice, and tools or techniques, to
help us in our everyday lives.

When we go out To consume, the restaurant is the instrument which supplies us with the information required to choose what to
purchase and how much to invest.

Running a Business also needs making decisions using information and techniques - how much inventory to preserve, what price to
sell it in, what credit arrangements to provide, just how many people to employ.

Decision Making Procedure in company is the systematic process of identifying and solving issues, of asking questions and finding
answers. Decisions usually are made under conditions of uncertainty. The future is not understood and sometimes even the past is
suspect. This guide opens the door for company owners and managers to learn about the variety of techniques that can be used to
improve your decision making process in a world of uncertainty, change, and uncontrollable circumstances.

A General Approach to Decision Making Procedure. If or not a scientist, an executive of a major company, or a small business owner
you can gain from improving your decision making skills. The overall solution to systematically solving issues is exactly the
same. The next 7 step approach to better management decision making may be utilized to examine virtually all problems faced by a
business enterprise.

State the problem. A issue first must exist and be realized. What is the issue and why is it a issue. What is ideal and how can
current operations vary from this ideal. Describe why the symptoms (what's going wrong) and also the triggers (why is it going
wrong). Try to define all terms, theories, factors, and relationships. Quantify the issue to the extent possible. If the problem,
not accurately and quickly filling customer orders, then try to ascertain just how many orders were incorrectly full and how long
it took to fill them.

Establish the Objectives. What are the objectives of the analysis. Which goals are the most crucial. Objectives are stated by
means of an action verb like to reduce, to grow, or to enhance. Returning to the customer dictate problem, the significant goals
is: 1) to increase the percentage of orders filled correctly, and 2) to decrease the time it takes to process and order. A
sub-objective could include to simplify and streamline the order fulfilling process.

Grow a Diagnostic Framework. Next establish a diagnostic frame, that is, decide what approaches are going to be utilized, what
types of information are needed, and how and where the info is available. Is there going to be a customer questionnaire, a summary
of business records, time and movement tests, or something else. Which are the assumptions (facts assumed to be right ) of this
analysis. Which would be the standards used to evaluate the study. What time, budget, or other constraints are there. What type of
quantitative or other specific processes are going to be utilized to analyze the data. (Some of which will be covered shortly). In
other words, the diagnostic framework determines the scope and processes of the entire study.

Collect and Assess the Data. The next step is to gather the data (by following the methods created in Step 3. Raw data is then
tabulated and coordinated to facilitate analysis. Tables, graphs, charts, indexes and matrices are a number of the standard
tactics to organize raw data. Analysis is the important requirement of audio business decision making. What does the data reveal.
What facts, patterns, and trends can be viewed in the information. A number of the qualitative methods covered below can be
utilized during the measure to determine details, patterns, and trends in data. Obviously, computers have been used widely in this
measure.

Generate Alternative Solutions. After the analysis has been finished, some specific decisions about the character of the problem
and its resolution should have been achieved. The next step is to create alternative solutions to the problem and position them in
order of their net benefits. But how are choices best generated. Again, there are several well established techniques such as the
Nominal Group Method, the Delphi Method and Brainstorming, among others. In these methods a group is involved, all people who have
reviewed the data and analysis. The method will be to get an informed group suggesting many different feasible solutions.

Grow an Action Plan and Implement. Pick the best solution to the issue but be sure to understand clearly why it's best, which is,
the way that it achieves the goals created in Step 2 better than its alternatives. Then develop a productive method (Action Plan)
to implement the solution. At this point an important organizational thought arises - who is going to be responsible for seeing
the implementation through and what authority does he have. The chosen manager should be responsible for seeing that all of tasks,
deadlines, and reports have been performed, fulfilled, and composed. Details are important in this measure: schedules, reports,
activities, and communication are the key elements of any activity plan. There are lots of techniques available to decision makers
implementing an action plan. The PERT method is a way of laying out an whole period like an action program. PERT is going to be
covered soon.

Evaluate, Obtain Feedback and Monitor. After the Action Plan was implemented to Solve a problem, management has to evaluate its
own effectiveness. Evaluation Criteria have to be determined, feedback stations developed, and observation performed. This Measure
ought to be done following 3 to 5 weeks and again at 6 months. The target is to answer the main point question. Has the problem
been solved?

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