Some restaurants use customer checks with pre-numbered sequence codes. Each food server uses these checks to write up customer orders. Food servers are told not to destroy any customer checks; if a mistake is made, they are to void that check and give another one. All voided checks are to be turned in to the manager daily. How does this policy help the restaurant control cash receipts? Do you think there is a more efficient way to control cash receipts? Explain.

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Some may find the fact that the per employee losses from fraud in the smallest business are 100 times greater than those at their largest counterparts a bit shocking. Unfortunately, I don't find it that hard to believe. Segregation of duties in a business is one of the most important internal controls a company can have. In general, segregation of duties serves two key purposes; assurance that a business is able to review and catch errors easily if there is an oversight, and to prevents theft and fraud (Complete Controller, 2018). This control allows businesses to effectively prohibit the allocation of responsibilities to one person. No business wants a payroll employee signing off on their own checks, nor do they want the bookkeeper reconciling their own work. When a company separates the duties, they allow three main functions to stay segregated; custody of assets, authorized use of assets, and keeping records of assets (Complete Controller, 2018). This sounds somewhat simple, but in small businesses this is hard to achieve due to the smaller amount of employees. Small businesses may have to find other ways to prevent and detect fraud.

Some restaurants use customer checks with prenumbered sequence codes. By making the employees use this system, it becomes easier to see when a transaction/receipt is missing. It is definitely crucial that the business also requires the employees to turn in voided checks as well, because wrongly voided transactions are common acts of fraud in restaurants. Servers will charge a customer for their full order but will then later void certain items from the bill and pocket the extra money (DeFlaminio, 2019). I believe that the system of prenumbered checks is a sufficient control as long as someone other than the servers themselves are entering in the transactions at the end of the day. A second, or even third, set of eyes on anything involving cash will help prevent and detect fraud.

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