General
Internal Controls
Accounting Controls
In all cases, employees handling cash, cash items, parts and accessories, or in position of trust should be bonded. This includes employees responsible for 401(k) or retirement benefit deductions. Since a dealership is primarily a retail store with all employees having access to merchandise and supplies, consideration should be given to purchasing a blanket bond that covers all employees. These surety bonds should be adequate in amount of protection and type.
Incoming mail should be opened and reviewed by management, preferably the dealer principal or general manager, or other designated employee.
Prospective employees’ references (including prior employment) should be checked.
All employees should be required to take vacations. An employee who declines to take vacations is an indication of a potential problem. Often evidence of theft is discovered while the employee is away from the dealership for an extended period of time. Make sure that all employees take vacations that are earned.
Posting references should be indicated on all appropriate source documents to create an audit trail.
Computer generated schedules of various balance sheet accounts should be carefully examined and reconciled at least once a month. Necessary adjustments to correct input errors should be promptly recorded.
LIFO adjustments (for those dealers electing the Last-in, First out method of valuing inventories) should be recorded at the calendar year end and also at the fiscal tax year-end, if other than the calendar year end. Professional tax and accounting advice should be obtained regarding the proper treatment of LIFO adjustments. The amount of the LIFO Adjustments should be recorded to Account 952 – LIFO Adjustment.
Pre-numbered documents should be used for repair orders, parts counter sales invoices, cash receipt tickets, vehicle sales invoices, checks, purchase orders, credit memos and all other source documents. These documents should be used in numerical order and missing documents should be accounted for.
Unused source documents should be kept under lock and key.
Time cards and clocks or time sheets signed by employees should be used.
Employees should be charged for personal use of company vehicles.
Repossessed vehicles should be handled in accordance with the Repossession Accounting Procedures as detailed in the GM Dealer Standard Accounting Manual and Handbook.
A fixed asset capitalization policy should be in effect and understood by accounting personnel.
Balance sheet accounts should be supported or reconciled to month-end data.
Some form of Daily Operating Control (DOC) should be in use.
General Journal entries should be adequately explained and corrections cross-referenced to original entries. General Journal Vouchers should be signed by the preparer and approved by the controller or office manager.
Payroll records should be up-to-date and contain written authorization for rates of pay.
The payroll copy of each technician’s time ticket should be compared to the original time ticket on the hard copy of the repair order. Internal control procedures should be in place if an “Electronic Payroll:” system is in use.
The reconciliation of the payroll bank account should be done on a regular basis at month-end.
An employee who is not involved with other payroll functions should do the reconciliation of the payroll bank account.
A procedure should be established for the sale of scrap and junk used vehicles to control cash involved.
The accounting records should be kept in accordance with the General Motors Dealer’s Standard Accounting.
The responsibility for compliance with various state, federal and local regulations should be assigned to applicable individuals. These regulations include, but are not limited to:
1. Occupational health and safety (OSHA)
2. Environmental protection (EPA)
3. Hazardous waste disposal
4. Equal opportunity (EOC)
5. Americans with Disabilities
6. Family leave
7. Workmen’s compensation and safety
8. Wage and hour regulations
9. Minimum wage laws
10. Chemicals in the workplace
Computer data should be safeguarded by the use of passwords. Computer data should also be updated nightly for backup protection and month-end data tape stored off site.