Purpose:

The purpose of the audit first and foremost is to make certain that the staff is performing all tasks as set forth in the standard operating procedures.  This could be as “harmless” as not having employees fully stock rooms with the required amount of toiletries or as damaging as allowing a part-time employee to countdown, prepare, and drop their own deposit without any supervision.  There is also a very important deterring factor to audits that is often ignored.  An irregular audit schedule makes a potentially DE have to be more creative in the way they steal for the company.  The more creative they have to be, the more mistakes they are likely to make, thus increasing the chases of the DE being caught.  If conducted thoroughly enough the likelihood of the employee giving up and not committing the theft increases greatly.  As mentioned in a previous article, the goal is to deter the 30% of employees looking for the opportunity from ever crossing that line into dishonestly.  This can all be accomplished by a simple excel spreadsheet and a well “cross trained” eye.

Philosophy:
In addition to the ultimate goal of deterring a potential DE; the compliance audit also helps breed a familiarity with management and staff.  When employees know that they can count on an impartial, helpful, and most of all knowledgeable auditor, management and staff are more likely to open up with regard to issues that pertained to theft, operational losses, and violations of policy.  When they only see the investigator when something goes wrong, or the auditor is not approachable, employees are a lot less likely to report any currently unknown issues.  One lesser known tactic is to include operations questions (usually not scored) as part of the audit.  These are questions designed to test the employee’s knowledge of day to day activities above all else; however they can also act as an ice breaker to relax the employee allowing the auditor/ investigator to obtain useful information.  All the gadgets and technology in the world can never replace the amount of knowledge and experience a full time employee will be privy to in a relatively short period of time.  Nothing beats a good tip!

Execution:
Questions usually lead to other questions before they lead to the answers.  When creating a compliance audit, it is important to get input from as many executive sources as possible.  Everyone believes that the issues in their “world” are the most important and should be the priority, so it is paramount to gather as much information from many different sources in order to cover all of the bases.  The big four are:

• Operations- Opening and closing procedures, cash handling, forms common to all, emergency procedures, filing of documents, delivery procedures, inventory, counts of key merchandise, equipment maintenance, etc.
• Physical Security- Key control, burglar/ fire alarms & response procedures, CCTV (cameras), register access, safe/ back room access, storage facilities (onsite & offsite),  etc.
• Loss Prevention- Theft and fraud awareness programs, documentation to be saved and/ or sent to corporate, accountability logs, security of personal belongings, inspection of personal belongings (upon arrival/ departure and whenever employees leave property) , visitor access controls, safety standards, how to handle merchandise not properly ticketed, etc. 
• Human Resources- Key government forms (I-9 & W-2), proper training forms, proper licensing forms, proper uniforms, workmen’s compensation and general liability forms on hand, accidents/ incidents on file, etc.