Chapter 6 Enhancing Security Through Procedural Controls

Shrinkage  Shrinkage refers to lost assets.  Most commonly known as employee theft.  May result from stealing or because employees are not doing their jobs as they should.

Reducing Shrinkage and Negligence Lawsuits  Improve quality of personnel hired.  Effective preemployment screening is critical.  Preemployment screening should include:  (1) an application and resume.  (2) intellectual and psychological tests.  (3) thorough background check with references and personal interview.  (4) possibly drug testing.

Educational Measures to Promote Security  Educate all employees as to their responsibilities and restrictions.  Establish reasonable rules and enforce them.

Procedural Controls  Procedural controls seek to prevent loss by limiting access to specific areas by unauthorized personnel.  Procedural controls include:  Stationing guards.  Restricting vehicle traffic.  Requiring registration and sign-outs.  Requiring display of badges or passes.  Ensuring key control.  Using effective opening, closing and after-hours procedures.

Effective Employee Badges or Passes  At a minimum, effective badges include:  (1) employee’s name.  (2) employment number.  (3) signature.  (4) photograph.  (5) authorizing signature.  They are also:  (1) sturdy.  (2) tamper-proof  (3) changed periodically.

Effective Key Control  A key control system:  (1) limits number of persons having keys.  (2) establishes master list of all existing keys and to whom they are assigned.  (3) keeps all duplicate keys secure.  (4) requires a physical audit periodically.

Effective Closing Procedures  Effective closing procedures include:  (1) checking all restrooms and areas where someone might be concealed.  (2) turning off all unnecessary lights and machinery.  (3) opening cash registers and placing money in the safe.  (4) locking the safe as well as all windows and interior doors.  (5) turning on security lighting.  (6) activating the alarm.  (7) securing all exterior doors.

Two-Person Openings and Closings  Opening and closing should be a two- person operation in an establishment where the risk of burglary is high and no security guard is on duty.

Theft Vulnerability  Storage areas particularly vulnerable to theft or employee pilferage are:  (1) areas where cash, valuables, records and forms are kept.  (2) mail rooms.  (3) supply rooms.  (4) duplicating rooms.  (5) computer rooms.

Shrinkage Prevention with Accounting Procedures  Keep limited cash on hand.  Establish strict procedures for obtaining petty cash.  Keep purchasing, receiving and paying functions separate.  Use prenumbered purchase orders in sequence.

Transporting Valuables  Maintain secrecy when transporting valuables.  Vary times, routes, personnel and vehicles used.

Theft Detection Procedures  Perpetual inventory and periodic internal and external audits.  Inspection of lockers, packages, vehicles, persons and trash containers.  Inspections are acceptable if they are done democratically and if procedure is clearly established and explained before inspection.  Usually an employee caught stealing from the company should be fired and prosecuted.

Additional Protection Against Financial Loss  Having insurance and bonding specific employees may help reduce loss.

Summary Questions  What is shrinkage?  What hiring procedures help reduce shrinkage and negligence lawsuits?  What educational measures promote security?  How do procedural controls prevent loss?  What procedures help control access to an area?  What characterizes an effective employee badge or pass?

Summary Questions  What constitutes effective key control?  What does an effective closing procedure ensure?  When should openings and closings be a two-person operation?  What areas are particularly vulnerable to theft?  What accounting procedures help prevent shrinkage?

Summary Questions  What procedures help detect theft or pilferage?  When are searches of lockers, vehicles, packages and persons acceptable?  What procedures should be used when transporting valuables?  What additional protection against financial loss is available to owners/managers?