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Employee theft in hotel and the ways to control it

Updated on August 3, 2012

Employee theft and its control in hotel

Type of employee theft at the purchase includes:
1) Kick backs: -
There are several common type of kickbacks, each involve purchaser working in collusion with someone from the suppliers company. In one kick back scheme F & B products are purchased at a higher than the necessary prices and thieves split the difference between the real and the inflated price, the payment can be in money or gifts, either way the owner is the loser.
This type is best controlled by the routine examination of the invoices and by soliciting price quotations on a random basis to ensure that the best price is paid for the product required.
Another kickback procedure involves ‘padding’ the invoice (adding items that were not received and or adding unreasonable handling or other charges). This scheme works well when the employee who purchases also does the receiving. This should prompt the manager to design a system, which separates the purchasing & receiving tasks.
2) Fictitious companies: -
Personnel who purchase can steal by setting up a dummy company, which can then submit invoices for products, which were never received. Managers should periodically review payee on company checks. Unless the manager is familiar with the supplier, checks should never be sent to companies with post box address (unless another address is provided on invoices).
3) Processing Threats:
Supplier may sent an invoice through a second time if the operation does not have an internal system to verify that invoices have not been paid and to cancel the invoices that have proper processing of purchasing documents to done to prevent this.
4) Credit Memo Problems:
Theft can occur when products are not delivered short, and when no credit memo is used to reduce the original delivery invoices for the value of the items not delivered. Managers or receiving personnel should never accept an oral assurance from the truck driver. A credit memo should be made immediately and attached to the delivery invoice.
The manager should also call the supplier to ensure that proper processing of the credit to the operation account has been under taken.
5) Delivery Invoice Errors: -
International arithmetic errors, short weights/counts, quality substitutions and similar ‘mistake’ can cost operation money. Regardless of whether these errors are international or not, the bottom lane is same the facility is going to lose money.
6) Quality Substitutions: -
Down grading of product with the hope that it won’t be noticed is another type theft, which can occur. Paying more for a lower quality product can be prevented by proper receiving practices. Brand or label substitution can also become a frequent problem if receiving personnel are not familiar with the products facility orders.

Control During Receiving
1) Receiving the wrong items [such as inexpensive foreign wines instead higher quality wines or 70% instead of 80% fat content ground beef] and paying higher prices for them.
2) Short weight of count by which the food & beverage operation pays for more products than received.
3) Receiving thawed product, which is represented as fresh & for which a higher price is charged.
4) Grounding ice into ground meat product adding fillers in applicable products or selling meat with excess trim.
5) Including weight of ice and / or packaging in amount of product for which price is charges.
6) Combining expensive steaks and inexpensive meat items into one container, weighing the entire container and billing the operation for the same.
7) Including one empty bottle in a case of, fro example 12 liters.
The list of possible ways that a supplier can steal from the property by over charging for the amount or quality of the product received may be endless. Problem can occur with almost any product ordered.
To guard against theft at the time products received specific receiving procedures should be adhered to.

Security concerns at time of storage involve.
1) Knowing how much product should be available at all times.
2) Knowing how much product is available (to determine if any product is missing)
3) Preventing physical access by persons who do not need to be present in storage area.
It is critical to ensure that storage areas are kept physically secure. The following measures should be adopted for this purpose.
1) There should be limited access. Only authorized personnel should enter storage areas. This policy is best met by locking all storage areas except during times of issue.
2) Storage area should be securely lockable; IT should be possible to lock the freezer [whether walk in or reach-in] as well as the dry storage and liquor storerooms. In addition a locking shelving unit in a walk in refrigerator can protect wines and other expensive items. One or more compartments of reach in refrigerator should be lockable, expensive fresh meat; seafoods and other valuable products should be kept in these units.
3) Inventory control practices must be adhered to items judged expensive and theft prone should be controlled through use of a perpetual inventory system. Item kept in the workstations, broken cases or other storage areas in small operations that are not under perpetual inventory may well be prime targets for theft.
4) If items kept in locked storage are needed during the shift a management official with access to storage area keys should retrieve the products.

In many small operations the issuing of food is a matter of simply walking back to the storage area and removing what is needed. Obviously with open door storage practices theft can occur in at least 2 ways.
1) Anyone can go anytime into a unattended storage area to steal products.
2) The employee who is removing products for preparation can remove an additional amount for personal use. This fact coupled with the common practice of not basing the amount of food with drawn on the quantity needed as per standard recipes and often not even in terms of anticipated sales forecasts-means that more products are than needed for preparation can be easily removed.

Common methods of storage and issuing can be tightened up immensely by use of the following procedures:
Storage areas should be kept locked; management personnel should unlock storage areas at specified times and supervises the withdrawal of food products.
Sales forecasts of quantity of food products needed should be made; standard recipe should be used. These 2 procedures will place a control standard on the amount of each food product, which would normally be expected to be removed from storage.
If a perpetual inventory system is used a simple listing of the type and amount of expensive products removed from inventory is necessary in order to update the perpetual inventory record. This can be done through use of a simple food withdrawal record. At an appropriate time management personnel can transfer information from the food withdrawal record to the perpetual inventory record. Random checks of quantity on hand after issue [from the adjusted perpetual inventory record] should be compared to the actual amount of product available (from physical count)

Several basic principles of food production relate directly to security and theft prevention. These include the following.
The manager must have an idea of the quantity of food to be produced. This estimation is made from sales fore casts based on the amount of past sales under similar conditions.
Over production, which leads to waste and leftovers, must be, minimized often foods in process are inadequately controlled and can be more easily stolen.
One type of employee pilferage occurs when employees eat on the job. A policy regarding employee eating should be established and consistently enforced.
Only the amount of ingredients actually needed for food production should be withdrawn from storage.
Close employee supervision is needed to assure that security control systems are not violated.
Garbage cans, employee packages, and similar places where stolen property can be hidden should be routinely checked. Utensils, service ware etc… which are disposed of by careless employee can also be discovered by checking waste containers.
Items withdrawn from storage and not used should be returned to the security of the storage area as soon as possible.
No item should be discarded, either because of alleged spoilage of improper preparation with out prior approval of management.
Employees should not be allowed to take home leftovers or scrapes for pets, since this promotes over production and encourage wastefulness.
Personnel such as cooks & stewards should not be permitted easy access to storage areas, and should not be allowed to wander around the property. They should be questioned.
No food should be produced on the line for presentation to a food server without submittal of a duplicate copy of the guest check (or use of a similar procedure to ensure that food sales are entered in the operation’s sales income control system)
Burns returns and other food problems should not be discarded without management approval.
Supervisors should be alert to the possibility of cooks giving food to their employees for personal consumption. This practice should not be permitted.

Cashiers can steal from guests in the following ways.
By keeping a credit card to use in converting cash sales of other customers to charge sales.
By embossing charge card vouchers with a guest’s credit card before returning the card, and then using the charge vouch Eros to convert cash sales to charge sales.
By using wrong sales amounts to complete the credit card voucher and by increasing the amount, if any, of the tip. Use of proper credit card processing procedures (which of course involve return of credit card to the guest) can reduce the possibility of charge related problem occurring.
By over charging guests. Auditing of tickets will ensure that arithmetic errors are not made and will verify that the correct check total is the amount printed on the ticket by the register.
By misusing guest checks. When guest check duplicates are used and when someone other than the cashier audits checks, it becomes more difficult to manipulate (increase) charges, to pad (add items to) checks, add to switch checks so that a customer pays for someone else’s higher bill.
By committing purposeful errors in making change. Instructing cashiers to “count up” from the amount of change to the amount of money given to pay the bill might prevent this. As would be expected opportunities for cashier theft from guests is minimized when sales income, cash register, ticket control, and auditing procedures are implemented.


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