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Mid-Month Schedule and Operational Reports Check

By Phil Villegas

Our firm is in the business of internal controls, which in essence is the safeguarding our dealer’s assets.  When we evaluate the internal controls of dealerships, we are primarily looking for weakness in the system that can lead to the dealership losing some of its assets, i.e., cash/profitability.

Internal controls at a dealership are not difficult, a little bit of common sense along with utilization of the DMS’ resources go a long way in safeguarding the dealership’s assets.  Dealership internal controls are less about having a written and detailed list of operating procedures and more about having good oversight.  When we encounter breakdowns in a store’s internal controls during our testing, it’s typically not because there wasn’t a system or process in place, but rather we find the breakdown is a human one.  Individuals failing to do their job is not only the most common reason why internal controls break down, it also the leading cause the internal control breakdowns are often not detected and corrected in a timely basis.  We tend to focus our efforts on the departmental management of the dealerships for this reason, because we know their degree of attention to internal controls enforcement will likely ultimately  trickle down to other employees within their respective departments.

One of the quickest and most effective ways of getting a sense for a dealership’s or department’s enforcement of internal controls is to simply print one of their key operating reports mid-month.  Mid-month reporting becomes an effective tool since most managers are not expecting it, as compared to a month-end report when all eyes are focused on the end result.  You will typically find the best managers are constantly reviewing key operating reports weekly and daily, whereas some less than effective managers are only concerned with month-end reports.  In dealerships, it not only about the destination of profitability, but also about the journey of how we arrived there.

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