If you are like a sizable percentage of car dealers, a substantial portion of your financial wealth is your dealership investment. Are you protecting that investment?

It may surprise you to learn there are small, low-cost controls you can implement that can result in vast savings. For instance, consider the following in relation to the parts department.

• Are the doors to the parts department always locked and only authorized personnel granted access?
• Is there a physical inventory performed, at least annually, that is reconciled to the accounting department? Ideally, the physical inventory should be overseen by someone other than that parts department’s manager. If you have multiple dealerships, consider having a parts manager from one of your other dealerships oversee the physical inventory.
• What do the physical grounds look like outside the back door of the parts department? Keeping that area clear and not allowing vehicles to be parked around the door helps deter parts inventory from leaving out the back door.
• Are packing slips matched up with invoices to determine the parts purchased were delivered to your dealership? Does the accounts payable clerk watch for unusual purchases, such as non-stock parts without an associated repair order number, and bring those to the office manager’s attention?

Speaking of purchases, are packing slips matched up with invoices for information technology equipment purchases (i.e., computers and tablets)? Just like vehicle parts, information technology equipment can easily be sold on eBay. Because of the increase in the de minimis safe harbor election, most computer and tablet purchases are expensed and not tracked on a depreciation schedule. Your IT manager should maintain an inventory of the dealership’s information technology equipment. This inventory log can be an excel spreadsheet listing each item’s serial number, location, manufacturer and custodian and any other information useful in physically identifying the equipment. An employee other than the IT manager should be tasked with spot-checking items to ensure they have not left the dealership.

These small controls over parts inventory and IT equipment also set the tone with employees that there are controls in place to identify theft and help deter theft and misuse of all company property. The controls mentioned are just a few ways of protecting your investment. 

Tasha R. Sinclair, CPA/ABV, is the current Chairperson of the AutoCPA Group, a nationwide organization made up of 25 CPA firms specializing in services to automobile dealers. In addition, she is a member of Tetrick & Bartlett, PLLCs dealer services team and has been providing accounting, tax, valuation, and consulting services to automobile dealers since 2002. Tetrick & Bartlett, PLLC currently serves approximately 50 automobile dealers in West Virginia, Virginia, and Ohio. Tasha can be reached at tsinclair@tb.cpa or 304-624-5564.