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How to catch an off-book thief

For many companies, especially cash businesses, employee is consideredjust a cost of doing . Particularly hard to spot are "off-book" thefts,in which is stolen before it gets into your bookkeeping system.

CPA Thomas Rafferty, a partner with Fairfield, , accounting firmMintz Rosenfeld & Co. and an expert on small-business fraud, says there arecommon off-book schemes to look out for. These include skimming, where aportion is pocketed before the sale is rung into the register; fraudulentvoids, where sales are made to look like they were canceled, a mistake was madeor the merchandise was returned; and swapping noncash for cash by not recordingchecks or credit card receipts in the register and taking a correspondingamount of cash.

Typically, you don't realize such thefts are occurring until so long after thefact--sometimes not until financial reports indicate reduced profits--thatidentifying the perpetrator is difficult, if not impossible. And when the thiefis stealing very small amounts, there's almost no way to find out.

How can you detect and prevent off-book theft? Rafferty offers these tips:

Be sure your cash register display is in plain view. This allowscustomers to see they aren't being overcharged and that the amount they'reasked to pay is the amount that was rung into the register.

Always give receipts. Make it a policy to give receipts with every sale,and consider offering a reward to customers who don't receive one.

Review your transactions often. Look at cash register tapes and creditcard charge slips for unusual patterns, excessive voids or other suspiciousactivity. The benefits of this routine go beyond identifying theft. If, forexample, you have an employee who voids a lot of sales, he or she may bestealing--or might need training on how to properly operate the equipment.

Require a supervisor's approval on voided sales. Such scrutiny makes itharder to pocket cash unseen.

Consider visual monitoring methods. Mystery shoppers and plainclothessecurity may be able to spot theft. Or you could install surveillance cameras.

Use controls that will help you take action. It's not enough to quantifyyour loss; you also want to identify who was responsible. Implementtheft-control measures that will pinpoint the source.

Many entrepreneurs feel that such supervisory measures are just tootime-consuming. But if you don't have time for these onerous tasks, Raffertysays, your business may be too large for you to manage alone.

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