Food and beverage control systems

Mitigating the negative impacts of fraud, unauthorized transactions and other violations of company policies and procedures, thus effectively keeping them in check through oversight and process controls is very important. Especially in cash generating units such as a restaurant.  Below are some of the controls that even the smallest organization should implement to help prevent and identify high risk areas!

Cash

Being a very high risk area, especially in the case of restaurants, where in almost everything is dealt in cash; it becomes a very high priority for implementing internal controls.

Who is closing the restaurant each day and reconciling the night sales? Who is opening and making the morning deposit?  Theft can occur when the same manager counts the drawer at night and makes the deposit the next day—quietly siphoning off cash.

Reconcile their daily deposit reports and compare these reports to what is deposited in the bank

Perform monthly bank reconciliations timely and without fail, and the person preparing bank reconciliations should not be the individual making deposits in the bank. 

Restaurants should limit the number of employees with the authority to sign checks.   

Payroll

The most important and most likely area of frauds such as embezzling of company funds , generating faulty checks etc. , concerns positions such as CFO , or a finance manager or a payroll employee.

To prevent this, assess the role of each employee and watch who has access to the payroll system and matching the records with those whose responsibility it is.

 Different responsibilities (setting up new employees, maintaining the system and generating checks) should be segregated among employees

Payroll registers should be reviewed before and after they are submitted to processing.

Store monitoring

Review payroll prior to processing.  Do labor percentages look reasonable?

Review and approve all store invoices.  Is the store overpaying vendors?  Is someone assigned to review pricing?

Review and approve daily sales reports.

Review inventory for completeness and accuracy.  Does the store have a lot of waste?  Are food costs too high?

Each location or branch should be responsible for their own operational and financial performance. At the end of the review and approval process, the manager of that branch should send out a financial report to the head office detailing all such results of tests of controls performed .Ensure compliance with policies and procedures for human resource functions.Review the results of store performance for accuracy.

Accounts payable

Similar to payroll fraud, employees in the accounts payable function can set up new vendors, enter invoices and produce checks—and by extension, create fictitious vendors and misappropriate cash.  Responsibilities should be divided among multiple employees wherever possible to reduce this risk.

Although proper segregation may not always be possible in smaller organizations, and companies cannot completely eliminate incidents of fraud, there are ways for restaurants to meaningfully reduce their risks.

Formal documentation of all policies and procedures, as well as employee training, are simple yet important steps restaurant executives can take to reduce their exposure and protect their businesses