Many retail businesses implement careful controls over the use of their cash registers. For this reason, register-disbursement schemes are among the least costly types of cash frauds. Without such controls, however, businesses risk significant losses. Here’s how to make sure your company is doing everything it can to prevent this type of fraud.

Red Flags
Issuing fictitious refunds and falsely voiding sales are a couple of common ways employees steal money. Both methods involve paying out cash without a corresponding return of inventory and usually result in abnormally high inventory shrinkage levels.

But high shrinkage is just one way to spot cash register disbursement fraud. Other red flags include:

• Disparities between gross and net sales

• Decreasing net sales (increasing sales returns and allowances)

• Decreasing cash sales relative to credit card sales

• Forged or missing void or refund documents

• Increasing void or refund transactions by individual employees

• Multiple refunds or voids just under the review limit.

Any of these warning signs may warrant investigation. A fraud expert can help you determine whether discrepancies have innocent explanations or indicate a more serious problem.

Prevention Measures 
Your business can prevent cash register theft by taking preventive measures. These include having written ethics policies and providing employees with anti-fraud training. In many cases of register theft, several employees are aware that it’s happening. So be sure to provide a confidential hotline or other means for employees to report unethical behavior without fear of reprisal.

Your fraud detection and deterrence program should also include training internal auditors to regularly perform horizontal analysis of income statements. Horizontal analysis — which compares financial statement line items from one period to the next — can identify suspicious trends, such as an increasing number of cash refunds.

Professional Help
Taking these simple steps can prevent significant losses. But signs of extensive cash register theft usually indicate bigger issues.

© 2018

---

The information contained in the Knowledge Center is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. In no event will CST or its partners, employees or agents, be liable to you or anyone else for any decision made or action taken in reliance on the information in this Knowledge Center or for any consequential, special or similar damages, even if advised of the possibility of such damages.