Cash registers have evolved over time as employee fraud schemes became more sophisticated.
Cash register fraud occurs when an employee steals money from a cash register at his workplace. Simple schemes involve merely pocketing cash, but more elaborate fraud also occurs. Most people who commit cash register fraud get caught, because at the end of a shift, managers will review a register tape and determine that there is a shortage. Over time, clever clerks have developed numerous ways to outsmart the cash register by exploiting various control weaknesses.
Phony Refunds
Employees can commit cash register fraud by inputting a phony refund into the machine, then pocketing the cash. One way to prevent this is to give employees unique identification numbers that must be entered before engaging in a transaction. With this system, management can track whether some employees are handling more refunds than others. Another prevention technique is to require management approval for refunds, so that management must physically view the item being returned and the customer who's returning it.
Under-Ring
Cashiers can ring up a product for less than its listed amount, but charge the customer the correct amount. In this scheme, the register tape will match the amount of cash in the drawer, and the customer may have paid the correct price. But the employee pockets the difference between the under-ring and the correct price. Management can eliminate this fraud using bar code scanners, taking away employee's ability to change prices.
The Extra Cash Register
One way that a management employee can lift cash from a till is by opening an extra lane at a supermarket and failing to turn over the cash. In this scheme, an employee reports to a supervisor that there are seven cash register lanes open, when in reality there are eight. At the end of the night, the employee simply pockets the cash from the eighth cash register. This fraud can be caught by examining gross profit margins that fall well below expected levels.
Cost
Cash register fraud is among the least expensive forms of fraud to an organization, according to the Corporate Fraud Handbook. In a 2006 survey of corporate fraud victims, companies reported that the average register scheme netted $26,000. While that might seem like a lot, compare it to fraud perpetrated by higher-level employees. Fake billing schemes, for example, cost an average of $130,000 per incident, according to the survey. As the authors note, the survey only asks respondents for information on thefts that have been investigated. Who knows how much fraud goes unnoticed or unexamined?
