Chapter 6Chapter 6Enhancing Security Through Enhancing Security Through

Procedural ControlsProcedural Controls

ShrinkageShrinkage

Shrinkage refers to lost assets.Shrinkage refers to lost assets. Most commonly known as employee theft.Most commonly known as employee theft. May result from stealing or because May result from stealing or because

employees are not doing their jobs as they employees are not doing their jobs as they should.should.

Reducing Shrinkage and Negligence Reducing Shrinkage and Negligence LawsuitsLawsuits

Improve quality of personnel hired.Improve quality of personnel hired. Effective preemployment screening is Effective preemployment screening is

critical.critical. Preemployment screening should include:Preemployment screening should include:

(1) an application and resume.(1) an application and resume. (2) intellectual and psychological tests.(2) intellectual and psychological tests. (3) thorough background check with (3) thorough background check with

references and personal interview.references and personal interview. (4) possibly drug testing.(4) possibly drug testing.

Educational Measures to Promote Educational Measures to Promote SecuritySecurity

Educate all employees as to their Educate all employees as to their responsibilities and restrictions.responsibilities and restrictions.

Establish reasonable rules and enforce Establish reasonable rules and enforce them.them.

Procedural ControlsProcedural Controls

Procedural controls seek to prevent loss by Procedural controls seek to prevent loss by limiting access to specific areas by unauthorized limiting access to specific areas by unauthorized personnel.personnel.

Procedural controls include:Procedural controls include: Stationing guards.Stationing guards. Restricting vehicle traffic.Restricting vehicle traffic. Requiring registration and sign-outs.Requiring registration and sign-outs. Requiring display of badges or passes.Requiring display of badges or passes. Ensuring key control.Ensuring key control. Using effective opening, closing and after-hours Using effective opening, closing and after-hours

procedures.procedures.

Effective Employee Badges or Effective Employee Badges or PassesPasses

At a minimum, effective badges include:At a minimum, effective badges include: (1) employee’s name.(1) employee’s name. (2) employment number.(2) employment number. (3) signature.(3) signature. (4) photograph.(4) photograph. (5) authorizing signature.(5) authorizing signature.

They are also:They are also: (1) sturdy.(1) sturdy. (2) tamper-proof(2) tamper-proof (3) changed periodically.(3) changed periodically.

Effective Key ControlEffective Key Control

A key control system:A key control system: (1) limits number of persons having keys.(1) limits number of persons having keys. (2) establishes master list of all existing keys (2) establishes master list of all existing keys

and to whom they are assigned.and to whom they are assigned. (3) keeps all duplicate keys secure.(3) keeps all duplicate keys secure. (4) requires a physical audit periodically.(4) requires a physical audit periodically.

Effective Closing ProceduresEffective Closing Procedures

Effective closing procedures include:Effective closing procedures include: (1) checking all restrooms and areas where someone (1) checking all restrooms and areas where someone

might be concealed.might be concealed. (2) turning off all unnecessary lights and machinery.(2) turning off all unnecessary lights and machinery. (3) opening cash registers and placing money in the (3) opening cash registers and placing money in the

safe.safe. (4) locking the safe as well as all windows and interior (4) locking the safe as well as all windows and interior

doors.doors. (5) turning on security lighting.(5) turning on security lighting. (6) activating the alarm.(6) activating the alarm. (7) securing all exterior doors.(7) securing all exterior doors.

Two-Person Openings and Two-Person Openings and ClosingsClosings

Opening and closing should be a two-Opening and closing should be a two-person operation in an establishment person operation in an establishment where the risk of burglary is high and no where the risk of burglary is high and no security guard is on duty.security guard is on duty.

Theft VulnerabilityTheft Vulnerability

Storage areas particularly vulnerable to Storage areas particularly vulnerable to theft or employee pilferage are:theft or employee pilferage are: (1) areas where cash, valuables, records (1) areas where cash, valuables, records

and forms are kept.and forms are kept. (2) mail rooms.(2) mail rooms. (3) supply rooms.(3) supply rooms. (4) duplicating rooms.(4) duplicating rooms. (5) computer rooms.(5) computer rooms.

Shrinkage Prevention with Shrinkage Prevention with Accounting ProceduresAccounting Procedures

Keep limited cash on hand.Keep limited cash on hand. Establish strict procedures for obtaining Establish strict procedures for obtaining

petty cash.petty cash. Keep purchasing, receiving and paying Keep purchasing, receiving and paying

functions separate.functions separate. Use prenumbered purchase orders in Use prenumbered purchase orders in

sequence.sequence.

Transporting ValuablesTransporting Valuables

Maintain secrecy when transporting Maintain secrecy when transporting valuables.valuables.

Vary times, routes, personnel and vehicles Vary times, routes, personnel and vehicles used.used.

Theft Detection ProceduresTheft Detection Procedures

Perpetual inventory and periodic internal and Perpetual inventory and periodic internal and external audits.external audits.

Inspection of lockers, packages, vehicles, Inspection of lockers, packages, vehicles, persons and trash containers.persons and trash containers.

Inspections are acceptable if they are done Inspections are acceptable if they are done democratically and if procedure is clearly democratically and if procedure is clearly established and explained before inspection.established and explained before inspection.

Usually an employee caught stealing from the Usually an employee caught stealing from the company should be fired and prosecuted.company should be fired and prosecuted.

Additional Protection Against Additional Protection Against Financial LossFinancial Loss

Having insurance and bonding specific Having insurance and bonding specific employees may help reduce loss.employees may help reduce loss.

Summary QuestionsSummary Questions

What is shrinkage?What is shrinkage? What hiring procedures help reduce shrinkage What hiring procedures help reduce shrinkage

and negligence lawsuits?and negligence lawsuits? What educational measures promote security?What educational measures promote security? How do procedural controls prevent loss?How do procedural controls prevent loss? What procedures help control access to an What procedures help control access to an

area?area? What characterizes an effective employee What characterizes an effective employee

badge or pass?badge or pass?

Summary QuestionsSummary Questions

What constitutes effective key control?What constitutes effective key control? What does an effective closing procedure What does an effective closing procedure

ensure?ensure? When should openings and closings be a When should openings and closings be a

two-person operation?two-person operation? What areas are particularly vulnerable to What areas are particularly vulnerable to

theft?theft? What accounting procedures help prevent What accounting procedures help prevent

shrinkage?shrinkage?

Summary QuestionsSummary Questions

What procedures help detect theft or What procedures help detect theft or pilferage?pilferage?

When are searches of lockers, vehicles, When are searches of lockers, vehicles, packages and persons acceptable?packages and persons acceptable?

What procedures should be used when What procedures should be used when transporting valuables?transporting valuables?

What additional protection against What additional protection against financial loss is available to financial loss is available to owners/managers?owners/managers?