The fact that the restaurant is using customer checks with pre-
numbered sequence codes would mean there is an account for all
checks used and this provides a way to detect unrecorded transactions.
Therefore, a missing check is an indication that a customer did not pay
for a meal. Having a pre-numbered sequence codes allow the restaurant
to track, all checks, when used, including the voided items, which can be
easily determined by the server assigned to that batch of checks. This
policy helps to deter the risk of potential fraud or theft, (for example,
serving friends or family and not requiring them to pay for the meal or
collecting the funds and pocketing payment and destroying the check)
because a reconciliation at the end of day of all checks will reveal that
one or more are missing. This policy also strengthen the server’s
accountability and responsibility of checks assigned to them.
a a a The article “protect small business,” by Joseph T. Wells stated that
small businesses are more vulnerable to fraud activities since the
business may have inadequate employee prescreening, limited controls,
and having too much trust. Small businesses rarely takes the time to
engage in the proper applicant screening which leaves the entity to
attracting unqualified and under-qualified applicants. A background
screening process will allow the business to get a complete picture of an
applicant, which will help to hire the most qualified people and improve
the businesses productivity. This also helps to prevent instances of
theft. A small business tends to have a limit amount of personnel
available to carry out the daily operations of the business, despite this
the business should ensure its internal controls are adequate to prevent
internal fraud, which always limit access to cash registers, drawers, and
safe or in this scenario pre-numbered checks. Placing too much trust in
the members on the team sometimes forces us to overlook red flags.
However, implementing secure measures for handling of cash or check
items and performing reconciliation of key accounts regularly.
a a a
To adopt the adequate controls in a small business will require the
assistance of a professional which comes at a cost and a small business
owner may not be able to afford the cost, which leaves the business
vulnerable to theft or fraud. The Association of Certified Fraud
Examiners (ACFE) pointed out that fraud is more likely for small
business 100 times the number of larger businesses. It is critical that
small businesses adopt an effective internal control, which raises the
level of the managers ability to detect fraud and trained on risk controls
through proper training. A small business could also benefit from the
professional knowledge of a CPA to review the small business current
system and cash related transaction.
A more efficient way to control cash receipts would be to adopt a
better management software to improve the control. The restaurant
management system is a type of point-of-sale (POS) software which is
specifically designed for restaurants and the food service industry. A
POS system requires a server to place an order through a server
terminal and it is printed in the kitchen. An incorrect order can be
voided but a manager’s authorization is required to delete an order from
the system. However, unlike the POS system, a retail management
system (RMS) can provide all the back-end needs such as inventory and
staff management.
All the best,
Charmaine
References:
Kuligowski, K. (2022, June 30). Small Business Guide to a Restaurant
Management System. business.com. Retrieved on November 29,
2022, from https://www.business.com/articles/restaurant-
management-system-guide/
Rendes, J. (2021, November 4). 10 Basic Internal Controls for Small
Business Fraud. 8020 Consulting. Retrieved on November 29,
2022, from https://8020consulting.com/10-basic-internal-
controls-small-business/
Wells, J. B. Y. T. (2003, March 1). Protect Small Business. Journal of
Accountancy. Retrieved on November 29, 2022, from
https://www.journalofaccountancy.com/issues/2003/mar/protec
tsmallbusiness.html
