By the nature of their business, car dealerships can face significant losses due to employee theft. With a large volume of transactions, the high value of the inventory, and the many individuals involved in daily operations, dishonest employees have plentiful opportunities to steal and skim from car dealerships. For dealerships looking to minimize losses, it is crucial to implement deliberate, multi-level measures.
Remember the Basics
Strong security is a critical first step to catching and deterring fraud at dealerships. Video surveillance should provide clear coverage of the entire property, inside and out, in high enough resolution to make out key identifying details such as license plate numbers and faces. Locks and alarm systems should use biometric components–such as voice recognition or thumbprints. These measures can protect against employees sharing codes or keys to provide others with unauthorized access.
Like sufficient security systems, a seemingly obvious measure for preventing employee fraud is to take discrepancies and suspicion seriously. It is unwise to shrug off a discrepancy as an honest mistake or label a suspicion as paranoid or foolish. The cost – in time, money, and energy – of following a hunch or getting to the bottom of a discrepancy is insignificant compared to the cost of ongoing employee fraud.
Securing Systems
Many car dealerships can benefit from conducting an internal systems audit to track which employees have access to cash, inventory, and the dealership management system (DMS). From there, leadership can ensure sufficient oversight is built into the process by applying several key questions to their process:
- Who needs to have access to this and who does have access? Aim for restricting access to only those who need it.
- What could an employee do with their access, if they had ill intentions?
- Who is reviewing this? Where there is no clear answer, consider implementing additional oversight.
A key area for oversight is ensuring no single employee has access to an entire process. For example, monthly reconciliations of parts inventory should not be reviewed by an employee with a hand in the receiving process.
Similarly, dealerships should take care when granting employees access to their DMS. Through personnel changes, shifting job responsibilities, and even business growth, it is common for employees to accrue more DMS access than is necessary for their job functions.
While extra access may help daily operations run smoothly, it creates distinct openings for employees to meddle outside their role and even falsify data. Dealerships should aim to restrict system access to strictly what is necessary for the employee’s role in the DMS. As such, office managers can work to close gaps by taking an active approach to managing user access in the DMS or ensuring IT/systems administrators are constantly in the loop about personnel/process changes where the DMS is concerned.
Car dealerships should opt to take a proactive stance against employee theft. By ensuring sufficient security, consulting a forensic accounting firm such as SDC CPAs, reviewing internal processes, and carefully managing DMS access, dealerships can adopt a multi-prong approach to mitigate their risk of major losses to employee theft.