ABC Company is a relatively small dry-cleaning operation that has a very steady
ID: 2523850 • Letter: A
Question
ABC Company is a relatively small dry-cleaning operation that has a very steady level of business. Since the company hired a new employee, however, cash inflows have decreased and the amount of promotional coupon redemptions have increased dramatically. The owner of the company has been very impressed with this new employee, but has suspicions regarding her cashiering practices. When comparing cash sales to check and credit card sales, the owner noted that the coupon redemption rate was dramatically higher for cash sales. The owner does not want to wrongly accuse the employee if she is innocent, but does want to find out if fraud is occurring. The owner calls you as an expert on fraud and asks you to recommend a reliable way of gathering evidence that could determine if fraud is occurring. What are some possible investigative methods you could suggest?
Explanation / Answer
The investigation methods that I will suggest in this case are surveillance and invigilation.
The employee in question should be subjected to active surveillance. This could be done by putting up a camera near the cash register. This will enable to monitor the activities of the suspected employee and determine if the employee is indulging in any wrongful activities. However this method will give rise to privacy issues that the owner will have to deal with.
The suspected employee should also be subjected to invigilation. A close track of cash flows and coupon redemptions would have to be kept and the data should be examined separately for the following periods - before the invigilation period, during the invigilation period and after the investigation period. This will help in determining any glaring anomalies and discrepancies.