Fall 2012 issue of Horizons

HOSPITALITY & GAMING

Payroll (In-house) Many clubs process payroll in-house as opposed to outsourcing the process. In these cases, one employee may maintain the employee master file, process payroll and print the checks or submit the direct deposit. In some cases, the same employee even has check-signing authority or utilizes a signature stamp. Among the many risks here is another of the top five common frauds committed in business which is the creation of fictitious employees. Other risks include adjustment of payroll rates, altering seasonal employee information and issuing bonuses that weren’t authorized. Some compensating controls that help mitigate the risks in the area of payroll include:

∙ Independent authorization and approval of hours and pay rates

Cash Receipts Cash receipts are just as susceptible to fraud as disbursements if the same employee processes member billings, receives and processes member payments and issues member credits. If one employee performs these duties, that individual is in a position to divert cash for his/her personal benefit. Some compensating controls that help mitigate the risks in the area of cash receipts include:

∙ Independent approval of vacation and sick leave

∙ Independent review and approval of payroll

∙ Periodic, independent distribution of employee checks/direct deposit stubs

∙ Independent review of employee edit reports

∙ Utilization of a lockbox

Inventory If one individual is in charge of purchasing, receiving and performing the physical count of inventory, that individual could be having five-star meals at home every night or playing with the newest golf equipment every week. Here are some compensating controls to help mitigate the risks in the area of inventory:

∙ Restrictive endorsements on checks received

∙ Independent reconciliation of checks received to checks deposited

∙ Independent review of all member credits issued

∙ Reconciliation of cash bar revenues with consumption

page 22 | horizons Fall 2012