Internal Audit & Restaurant Guard

Galina Seliounina, Internal Auditor, Landry’s Inc.

Scott Walton, Product Manager – Restaurant Guard, NCR Wednesday February 5, 2014

February 2014 1

AGENDA

• • • • • • • •

Introduction Why people commit fraud What is Restaurant Guard Restaurant Guard Mobile Restaurant Guard Audit Employees misappropriation and its effect on the restaurant Internal controls checklist (SIP) Questions

2

Source: UC Merced.edu

3

The Fraud Triangle: Most people who commit fraud at work are often trusted staff with no criminal history. The are three factors that must be present for an ordinary person to commit fraud: Motivation, Rationalization, and Opportunity - the Fraud Triangle.

•Motivation or pressure may include financial problems, addictions like gambling, shopping or drugs, pressure to show good performance or results, or just the thrill of being able to get away with something.

•Rationalization is when individuals think they are justified because they are underpaid, or it's for their family, or they need it now but they'll pay it back before anyone notices. •Opportunity is created when there are weaknesses in controls. Individuals think they won't get caught because nobody is looking, or reviewing, or performing reconciliations and reviews.

Source: UC Merced.edu

4

WHAT IS NCR RESTAURANT GUARD?

A loss prevention tool that uses pattern matching and statistical analysis to identify suspicious events within restaurants. Restaurant Guard: • Monitors POS transactions in real time and identifies known theft patterns via exception alerts • Performs sophisticated statistical analysis against POS historical data to find suspicious trends and outlier transactions Restaurant Guard accomplishes these goals with two complimentary modules: Restaurant Guard Mobile and Restaurant Guard Audit 5

RESTAURANT GUARD MOBILE

• Part of the Pulse Platform • Site client sends POS transactional data to NCR data center for real time analysis.

• Alerts sent to phone within seconds of suspicious activity • Leverages Insight security • Two days of data maintained on mobile device • Available on both iOS and Android • <> 6

RESTAURANT GUARD AUDIT

• Daily summary data (dated subs) polled from sites after end of day for thorough analysis.

• Summary alert reports generated / posted to the Restaurant Guard portal on a weekly basis • 400 days of transactional data and 180 days of exception alerts maintained on portal

DATA CENTER

DATA STORAGE ANALYSIS / THEFT DETECTION ALERT GENERATION DATED SUB ALOHA POS 7

RESTAURANT GUARD AUDIT SUSPICIOUS ACTIVITY ALERTS

• Post Close Comps/ Post Close Voids • Landry’s Select Club card (LSC) abuse • Suspicious transfers • Spill checks 8

EMPLOYEES MISAPPROPRIATION and THE EFFECT on the RESTAURANT Scenario 1: POST CLOSE COMP AND POST CLOSE VOID “M anager reopens cash check and applies discount or void for personal gain” P1 – P4

9

Scenario 2: LSC fraud “Employee fraudulently acquires LSC card and applies rewards on cash checks ” L1 – L4

10

Scenario 3 TRANSFER “Employee transfers an item before closing check to cash” T1 – T5

11

Scenario 4 SPILL CHECK “Transferred item is moved to spill check” S1 – S3

12

INTERNAL CONTROLS CHECKLIST L2, T1

13

The Fraud Triangle: Most people who commit fraud at work are often trusted staff with no criminal history. The are three factors that must be present for an ordinary person to commit fraud: Motivation, Rationalization, and Opportunity - the Fraud Triangle.

•Motivation or pressure may include financial problems, addictions like gambling, shopping or drugs, pressure to show good performance or results, or just the thrill of being able to get away with something.

•Rationalization is when individuals think they are justified because they are underpaid, or it's for their family, or they need it now but they'll pay it back before anyone notices. •Opportunity is created when there are weaknesses in controls. Individuals think they won't get caught because nobody is looking, or reviewing, or performing reconciliations and reviews.

Source: UC Merced.edu

14

QUESTIONS?

15