Updated Audit 2024

Loss Prevention Best Practice Audit Store #: Date: SM: DM: Manager(s) on Duty: Job Number:

Location: LPI Auditor: Last Audit Date: Last Audit Score: Time In / Time Out:

A

Cash Accountability

25

Points Achieved 0

B

POS Transactions / Administration

28

0

0.00%

C

Loss Prevention

43

0

0.00%

D

Inventory Control

35

0

0.00%

E

Physical Security / Safety

29

0

0.00%

F

Shrink Awareness

17

0

0.00%

177

0

0.00%

Section

Categories

Points Available

Overall Audit Compliance %:

0.00%

0.00%

Audit Score: Acceptable = 90% or Above, Not Acceptable = Below 90%

Copyright 2022 DTIQ

%

1 of 40

Points Available

A

Cash Accountability

1

Are the store funds (petty cash/safe, tills) properly accounted for/balanced within +/-$1.00?

3

2

Is the safe locked and/or secured at the time of inspection?

3

3

Are prior day's deposits accounted for in the safe since the last deposit drop at the bank?

3

4

Is the Petty Cash Log used daily to account for store funds?

2

5

Does the deposit slip amount match the Total Amount line on the Store Closed POS nightly report?

2

6

Does the deposit slip contain the initials of the closing manager and the associate who verified the deposit?

1

7

Does the deposit slip contain the deposit bag # or disposable deposit bag tear off?

1

8

Are deposits taken to the bank at a minimum of twice per week (Mondays and Thursdays) as evidenced by the dates on the validated bank deposit slips?

3

9

Is the Deposit Log completed per section depending on the status of the deposit?

4

10

Are overages/shortages exceeding $10 reported to the home office (help desk) and the DM with explanation, if known?

1

11

Is the cash wrap free of loose change, unidentified receipts or merchandise and/or individual gift cards?

1

12

Are register till keys maintained in the safe or lock box for emergency use only?

1 25

Comments/Notes: 1 2 3 4 5 6 7 8 9 10 11 12

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Points Achieved

0

Points Available

B

POS Transactions/Administration

13

Does the Daily Sales Total Report have the deposit slip attached?

1

14

Does the Daily Sales Total Report have the disposable bag tear off attached?

1

15

Does the Daily Sales Total Report have the High Risk POS transaction receipts attached?

1

16

Is paperwork filed in line with the company's template?

3

17

Do the number of refund receipts attached to the Daily Sales Total Report match what is on the nightly Till Summary receipt? Verify each till summary for the past 7 days.

5

18

Are the total refunds initialed on the Till Summary receipts initialed by the closing leader to verify they match?

Verify each till summary for the past 7 days.

3

19

If a refund count discrepancy is discovered, has it been explained/reported for research? Were any variances reported to the Help Desk? Verify each till summary for the past 7 days.

3

20

Are two signatures present, one being a member of management, on each available Refund transaction receipt?

2

21

Print the Post Void Transaction Report from Xstore for the last 60-days (Use for 22-24). Do the on-hand transaction slips on-hand match?

2

22

Does each on-hand Post Void transaction receipt contain two signatures (one being from management)?

1

23

Does each on-hand Post Void transaction receipt have an explanation for the transaction?

1

24

Does each on-hand Post Void transaction receipt have the original receipt attached?

1

25

Are Paid Out/Paid In transactions logged in full on the Paid Out Log?

1

26

Do Paid Out transactions have two signatures (associate is manager issuing Paid Out, payee is associate receiving the payout)?

1

27

Is each Paid Out transaction accompanied by a detailed receipt to support the expense?

1

28

Do No-Sale transaction receipts on-hand contain two signatures (one being a member of management)?

1 28

Comments/Notes: 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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Points Achieved

0

Points Available

C

Loss Prevention

29

Does the store utilize the At-A-Glance to improve guest experience and prevent shoplifting? Is this system in place on the day of the audit?

2

30

Are fitting rooms free of merchandise, loose tickets, hangers and empty packaging?

5

31

Are associates assisting each guest into a fitting room, writing guest's first name on fitting room door and checking on guest while in the fitting room?

2

32

Are associates storing personal belongings in a secured locker while on shift? Exception applies to the Store Manager and Assistant Manager who are allowed to keep belongings in the office.

2

33

Are lockers free from personal locks with a combination log kept on file?

1

34

Are lockers unlocked at the end of each associate's shift?

1

35

Are associate's bags and coats checked by management before exiting the store (on break or end of shift) in view of video camera?

2

36

Are clear trash bags used to store trash and are all cardboard boxes broken down prior to disposal?

1

37

Does management inspect trash/boxes prior to being removed from the store and supervise the trash removal process?

2

38

Are headsets/walkie talkies used by management and key associates to communicate to other associates / management?

2

39

Are associates asking visitors/vendors for identification before being granted access to stockrooms or cash wrap area and/or providing confidential information?

1

40

Was the backroom free from signs of potential theft?

40.1

Was the backroom free of stashed merchandise?

1

40.2

Was the backroom free of empty packaging, loose hangers, or loose tickets?

1

40.3

Was the backroom free of merchandise in non-merchandise areas?

1

41

Are the Loss Prevention Awareness Center Board materials posted and up to date?

1

42

Is the store's Shrink Reduction Plan completed and posted in clear view?

2

43

Are action items on the store's Shrink Reduction Plan being executed?

2

44

Does the store have the previous month's High Risk POS Summary report printed and posted in the backroom?

1

45

Have all prior audit exceptions been addressed and corrected?

5

46

Has the District Leader completed an audit at the store in the last calendar month?

3

47

Does the store have the last three months of self audits available for review?

3

48

Have the last three self audits been completed by at least two different associates?

5 43

Comments/Notes: 29 30 31 32 33 34 35 36 37 38 39 40 40.1 40.2 40.3 41 42

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Points Achieved

0

43 44 45 46 47 48

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Points Available

D

Inventory Control

49

Are shipment cases processed from oldest to newest (first in, first out) based on the dates written on each shipment case upon arrival to the store?

3

50

Do all completed outbound ship from store orders have a corresponding order in Xstore?

1

51

Do the physical items for in process orders (not fully sealed packages) match the packing slip. Verify UPCs.

2

52

Are processed Buy Online, Pick-up In Store (BOPIS) orders held in a designated area, with packing slips attached, and are all orders 7 days old or less?

2

53

Is a Damage Shipment Form completed for any cartons received as damaged or shows signs of tampering?

3

54

Are damages segregated between unprocessed and processed storage areas?

2

55

Are damages processed at a minimum of once per week by store management?

5

56

Do processed damages on-hand reflect the items noted on the Store Transfer Packing Slip?

3

57

Do completed Store Transfer Packing Slips on file contain the District Leader's signature?

3

58

Are Gently Worn Items tagged correctly and placed in the sale room?

2

59

Have all Damaged and Gently Worn items been reserved in the Clarity app for RFID?

2

60

Was an RFID count submitted after close of the prior day?

1

61

Are guest holds held in a designated area?

1

62

Does each guest hold have a completed Hold tag attached to the item(s)?

1

63

Are guest holds limited to the close of business the following day unless authorized for extension by a manager?

1

64

Are associate holds limited to the end of the associate's shift?

1

65

Are FedEx shipments verified through FedEx website to confirm all shipments were completed for business purposes?

2 35

Comments/Notes: 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65

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Points Achieved

0

Points Available

E

Physical Security / Safety

66

Is the office secured at all times when unattended?

3

67

Do all managers who carry keys to the store have a completed /signed Key Holder Agreement form on file?

2

68

Are keys to the front, back and office doors in the possession of store management at all times?

3

69

Are cameras and monitors operational and/or maintenance issues have been reported for service, if applicable?

Verify issues were reported for service via a maintenance request or email.

3

70

Is the date and time on the CCTV monitor accurate within +/- 5 minutes of current time?

1

71

Has the Monthly Detex Test Log been completed after the system has been tested?

1

72

Are exit doors closed with emergency exit door alarms (Detex) armed and functional? (test)

2

73

Is the alarm call list up to date with up to 4 active Managers?

2

74

Is the Alarm Code list up to date, with all current keyholders noted?

2

75

Do managers have their own alarm code and keep their codes confidential, not sharing codes with other managers/associates?

4

76

Are "permanent" off-site storage locations secured and is entry/key(s) accessible only to authorized management associates? This question only applies to stores with permanent offsites.

3

77

Are fire extinguishers hung, gage in the "green" zone and inspected within the last 12 months?

1

78

Are fire exits clearly marked and accessible (free of obstacles with the exception of shipment in process) with exit lights illuminated?

1

79

Are emergency exit lights functional when tested?

1

Points Achieved

29

0

Points Available

Points Achieved

Comments/Notes: 66 67 68 69 70 71 72 73 74 75 76 77 78 79

A

Shrink Awareness

80

Can Associates explain how to check large bills for counterfeit? (Ask Two Associates)

1

81

Are Associates aware of the location of the Anonymous Hotline telephone number? (Ask Two Associates)

1

82

Do Associates know the function and use of the Anonymous Hotline? (Ask Two Associates)

1

83

Are Associates aware of the monthly newsletter topic? (Ask Two Associates)

1

84

Can Associates elaborate on the monthly newsletter contents? (Ask Two Associates)

1

85

Are Associates aware of the previous physical inventory units and dollars lost per day as noted on the store's Shrink Result poster? (Ask Two Associates)

1

86

Do Associates understand what steps should/should not be taken if a guest attempts to leave the store without paying for merchandise or is suspected of shoplifting while in the store? (Ask Two Associates)

1

87

Do associate's understand the use of recovery statements (non-accusatory) when dealing with a potential shoplifter? Ask for examples. (Ask Two Associates)

1

88

Can the team identify the three primary sources of shrink and provide examples of each? (Ask Two Associates)

1

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89

Are Associates aware of the behavioral clues of a potential shoplifter? (Ask Two Associates)

1

90

Are Associates aware of QA process for accuracy and packing guidelines to minimize damages in transit and guest presentation? (Ask Two Associates)

1

91

Are Associates aware of how to respond to an active shooter situation? (Ask Two Associates)

1

92

Are Associates aware of what Exception Based Reporting is and how Altar'd State uses it? (Ask Two Associates)

1

93

Are Associates aware of what the store's % of returns to sales is and why it's important to monitor? (Ask Two Associates)

1

94

Are Associates aware of what the Associate Discount policy is and who is eligible to receive? (Ask Two Associates)

1

Are Associates aware of how to handle a no receipt refund? (Ask Two Associates)

1

Are Associates aware of the proper ways to enter and exit the store? (Ask Two Associates)

1

95 96 97

Are there any causes of shrink in the store you want to make me aware of? (Ask Two Associates) 17

Comments/Notes: 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97

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0

A 1

Cash Accountability Are the store funds (petty cash/safe, tills) properly accounted for/balanced within +/-$1.00?

Instruction

Refer to the Petty Cash Log to determine the opening count balance of allotted funds, which should be a petty cash fund of $300 and an additional $200 per register till. Ask the BOD (Butterfly on Duty) to conduct a count of all tills and petty cash in the safe when business allows time for the count. Do not personally count any funds, but simply observe the count being performed. A count is required even if the count has already occurred at the location prior to arrival. Note any discrepancy if the on-hand monies do not match the funds allocated to the store.

An allowance of +/- $1.00 is an acceptable variance.

Coaching Points

If a variance exists in the count and it was not noted on the opening fund count by the store, review the previous day's over/short amount from the prior night's Closing Worksheet in an attempt to identify the cause.

Example 2 Instruction

See Supporting Document file for an example of the Petty Cash Log. Is the safe locked and/or secured at the time of inspection?

The safe should always be locked and secured when not in immediate use.

A general "best practice" for management should be to confirm the safe is secure each time he/she leaves the Coaching Points office.

3 Are prior days deposits accounted for in the safe since the last deposit drop at the bank?

Any deposits since the last date when deposits were brought to the bank should be stored/found in the safe.

Obtain the Deposit Log to determine the last bank drop off of deposits. Check to ensure each deposit, up to and Instruction including the prior night's deposit, are in the safe. If a deposit is missing, ask the BOD to contact the bank to obtain a validated deposit slip.

Deposits maintained in the safe awaiting the next deposit drop should be verified daily by the opening manager to Coaching Points confirm all deposits are accounted for.

4 Is the Petty Cash Log used daily to account for store funds?

The Petty Cash Log is used to document the count of petty cash or safe funds each day. The log also includes over/short amount(s), any known explanations and a manager's initials who performed the count. Review the Instruction previous 14 days of the log to confirm all required information was complete. Note any dates missing any required information.

Any variances in the opening or closing counts, if unresolved, will affect the daily deposit amount. If the fund is Coaching Points short, the deposit should be shorted to reset the fund to the allotted amount. If the fund is over, the deposit should reflect the overage.

Example See Supporting Document file for an example of a Petty Cash Log. 5 Does the deposit slip amount match the Total Amount line on the Store Closed POS nightly report?

Instruction

The total per register that should be deposited, minus the opening till, is found on each register's nightly "Register Closed" reports as the Total Cash Deposit. These reports, when added together, will equal the Total Amount line on the Store Closed reports for all registers. The only variance to this deposit amount would be if the store had an overage or shortage for the day. Obtain the Closing Worksheets for the previous 7 days along with the attached Register Closed/Store Closed reports and deposit slips. The Store Closed POS report Total Amount line should equal the amount on the deposit slip for the day. Note any unexplained variances by date and amount in the comment section for the audit question.

These amounts should be matched each day to confirm the correct amount is deposited. Adding together the Coaching Points amounts from each till less the opening register amount to arrive at the deposit total may result in the incorrect amount being deposited.

Example 6

Instruction

See Supporting Documentation file for an example of a nightly Register Closed/Store Closed POS reports.

Does the deposit slip contain the initials of the closing manager and the associate who verified the deposit?

Each deposit slip should contain the initials of two associates (one being a member of management) who verified the deposit. Review the previous 7 days of the store's copy of the deposit slip to confirm there are two sets of required initials present. Note any missing initials by date and deposit amount in the comment section for this question.

It is imperative that both associates performed the verification in each other's presence and witness the bag being Coaching Points sealed. This, in conjunction with their initials, limits the possibility of error or theft of the monies if the bank has a variance. In addition, disposable bank deposit bags should be used in numerical order.

7

Does the deposit slip contain the deposit bag # or disposable deposit bag tear off?

Instruction

Each deposit slip should contain the disposable bank bag number or attached disposable deposit bag tear off.

Review the previous 7 days of the store's copy of the deposit slip to confirm the deposit bag number is written on the slip or the disposable deposit bag tear off slip is attached. Note any missing deposit bag numbers or disposable deposit tear offs in the comment section for this question.

The deposit bag number or deposit bag tear off attached to the deposit slip allows the deposit to be traced to a Coaching Points certain disposable deposit bag. If a variance occurs with the deposit amount, it can be identified by deposit bag number or disposable deposit bag tear off.

Are deposits taken to the bank at a minimum of twice per week (Mondays and Thursdays) as evidenced by 8 the dates on the validated bank deposit slips?

Instruction

Deposits are to be brought to the bank twice per week (Monday and Thursday). Any deposits in between the bank drop days are to be stored within the safe in a sealed disposable deposit bag. Obtain the validated deposit slips and/or bank receipts for the previous 7 days to determine if deposits are being taken to the bank as required.

Note any variance in deposit day receipts, which should always be Mondays and Thursday, unless specifically authorized by the District Manager to be deposited on a different day.

Any deposits not brought to the bank in a timely manner increases the risk of cash loss if the store was to experience a break-in or robbery.

9 Is the Deposit Log completed per section depending on the status of the deposit?

The Deposit Log is used to document the various manager responsibilities with handling deposits. The log is divided into three sections or stages - Closing Manager, Deposit Manager and Verifying Manager, to complete a Instruction deposit. Obtain the Deposit Log for the previous 7 days and confirm, based on the stage of the deposit, that the required information was completed. Note any missing information if the step has already been completed and the required information is blank or incomplete.

The Deposit Log shows the chain of custody by each manager handling a stage within the deposit process. If a Coaching Points deposit amount has a discrepancy, was dropped at the bank late or has an issue with verification, the problem can be traced back to the responsible manager.

Example See Supporting Documentation file for an example of the Deposit Log (form not titled).

Are overages/shortages exceeding $10 reported to the home office (help desk) and the DM with 10 explanation, if known?

If the store has an overage or shortage exceeding +/- $10 at the end of the night, they are required to contact the Help Desk in an effort to identify the variance prior to closing the registers. If the variance cannot be identified, an email should be sent to the DM with any known explanation for the variance. Review the Closing Worksheets for Instruction daily overage/shortages and confirm an email was sent to the District Manager to notify her/him about the variance. If no variances in excess of +/- $10 exist in the review period, ask the BOD to explain the process when the store has a variance in excess of +/- $10 to confirm he/she understands how it should be handled if the situation arises.

The store should research the variance prior to contacting the Help Desk so this information can be immediately Coaching Points offered and reduce any time on the telephone and in the store longer than needed.

Coaching Points

11

Is the cash wrap free of loose change, unidentified receipts or merchandise and/or individual gift cards?

The cash wrap should be neat, clean and organized as this area can easily be seen by the guest. Inspect the areas around each register, underneath the cash wrap and inside all drawers. This area should be free from loose change or monies (should be added to the till), unidentified receipts (should be inserted in the register slot), Instruction merchandise (should be placed in hold section, damaged area or returned to stock) or individual gift cards (should be maintained with other unused gift cards). Note if any of these items were found at the cash wrap and could not be identified.

Loose change, unidentified receipts, merchandise or individual gift cards may be signs of potential theft if found at Coaching Points the cash wrap without explanation. Efforts to eliminate these items leads to better organization and reduces the opportunity for theft.

12 Are register till keys maintained in the safe or lock box for emergency use only?

Each register till has a key lock to allow a key to open the register till if needed. The key for each register till Instruction should be maintained within the store's safe or lock box and only removed in an emergency (power outage, register malfunction). Determine the whereabouts of the register till keys.

A No-Sale transaction should be used to open the register till in a non-emergency situation. Register till keys kept on keys rings in the possession of a manager is an indication the key is used on a regular basis without a paper Coaching Points trail of the activity. A "best practice" is to seal register till keys in an envelope and have the Store Manager sign the seal. If the seal is broken, the Store Manager would know the keys were accessed.

B 13

POS Transactions / Administration Does the Daily Sales Total Report have the deposit slip attached?

The Daily Sales Total Report contains sales, returns (by dollars), paid in/out, and post void information. Attached to this form should be the deposit slip, disposable bag tear off and High Risk POS transaction receipts (register Instruction closing reports, No-Sales, Post Voids). Obtain these reports for the previous 7 days and confirm the deposit slip is attached each day. Note any missing deposit slips by date and amount in the comment section for this question.

Discuss the process of what should be attached with the BOD to verify a clear understanding of what is expected Coaching Points on a daily basis.

14 Does the Daily Sales Total Report have the disposable bag tear off attached?

The Daily Sales Total Report contains sales, returns (by dollars), paid in/out, and post void information. Attached to this form should be the deposit slip, disposable bag tear off and High Risk POS transaction receipts (register Instruction closing reports, No-Sales, Post Voids). Obtain these reports for the previous 7 days and confirm the disposable bag tear off strips are attached each day. Note any missing deposit bag tear off slips by date and amount in the comment section for this question.

Discuss the process of what should be attached with the BOD to verify a clear understanding of what is expected Coaching Points on a daily basis.

15 Does the Daily Sales Total Report have the High Risk POS transaction receipts attached?

Instruction

Coaching Points 16 Instruction

The Daily Sales Total Report contains sales, returns (by dollars), paid in/out, and post void information. Attached to this form should be the deposit slip, disposable bag tear off and High Risk POS transaction receipts (register closing reports, No-Sales, Post Voids). Obtain these reports for the previous 7 days and confirm High Risk POS transactions indicated are attached. Note any transactions required to be attached that are missing.

Discuss the process of what should be attached with the BOD to verify a clear understanding of what is expected on a daily basis.

Is paperwork filed in line with the company's template?

Daily paperwork should be filed in accordance with the template provided by the company. Required receipts, deposit slips, and the deposit bag tear off should be attached in line with the provided template.

Filing paperwork in accordance with the policy/template will help ensure all paperwork is accounted for, reviewed, and appropriately retained.

Do the number of refund receipts attached to the Daily Sales Total Report match what is on the nightly Till 17 Summary receipt? Verify each till summary for the past 7 days.

Review the Till Summary receipts for each register over the previous 7 days. The number of refund transactions Instruction should appear on the Till Summary receipt for each register. Verify the number of transactions present matched the Till Summary receipt for each of the previous 7 days.

Missing or re-printed refund transaction slips are a "red flag" that should be researched for explanation and Coaching Points closely monitored.

Are the total refunds initialed on the Till Summary receipts initialed by the closing leader to verify they 18 match? Verify each till summary for the past 7 days.

Review the Till Summary receipts for each register over the previous 7 days. The closing manager should review the Till Summary receipt for each register to ensure all transactions are accounted for. Verify there are initials Instruction present next to the refunds for each register over the previous 7 days. This would include initialing beside a refund count of '0'.

Ensuring all refund transactions are accounted for can help aide in preventing refund fraud. Any discrepancies Coaching Points should be called out and reported.

If a refund count discrepancy is discovered, has it been explained/reported for research? Were any 19 variances reported to the Help Desk? Verify each till summary for the past 7 days.

Coaching Points

Instruction

If the store identifies a missing refund receipt and properly reports it, they will receive an email with a ticket number that displays an item name "Overage/Shortage or Missing Return Slips". This should be printed and filed with the daily paperwork. Review the Till Summary receipts and refund receipts for the previous 7 days to ensure all transaction receipts are accounted for. If a missing receipt is identified, verify a ticket was submitted.

Coaching Points Tracking and reporting missing receipts can help pinpoint suspicious behavior.

Are two signatures present, one being a member of management, on each available Refund transaction 20 receipt?

A Refund transaction does require two signatures, one being a member of management, to be documented on the transaction slip. The slip does not provide signature lines, so the signature or initials need to be added to the Instruction slip. Obtain Refund transaction slips on-hand for the previous 7 days and confirm each has two sets of signatures or initials. Note any Refund slips without two sets of initials by date, transaction number and amount in the comment section for the audit question.

Each signature or set of initials should be added to the Refund at the time of the transaction. If a signature or Coaching Points initials is added after the transaction, it should be noted it was done without witnessing the Refund transaction or guest.

Print the Post Void Transaction Report from Xstore for the last 60-days (Use for 22-24). Do the on-hand 21 transaction slips on-hand match?

Have the manager on duty assist in printing the Post Void Transaction Report from Xstore for the last 60 days. If Instruction any transactions are noted, verify they are stored with the daily paperwork for the day.

Missing or re-printed Post Void transaction slips are a "red flag" that should be researched for explanation and Coaching Points closely monitored.

22

Does each on-hand Post Void transaction receipt contain two signatures (one being from management)?

Instruction

Each Post Void transaction slip should be signed by two associates; one being a member of management at the time the transaction occurred. Using the paperwork gathered in the previous question, confirm two signatures are present with each Post Void transaction slip. Note any missing signatures not present using the date and transaction number in the comments section for this question..

Coaching Points 23 Instruction

Coaching Points 24 Instruction

Coaching Points 25

Instruction

Coaching Points Example 26

Instruction

A Post Void transaction does not occur on a frequent basis and therefore should be extremely limited. This transaction should not be used in place of processing a refund as no guest information is required on this transaction. This transaction can also be used as a method for potential theft as the transaction is removed from the register.

Does each on-hand Post Void transaction receipt have an explanation for the transaction?

Each Post Void transaction slip should have an explanation or reason for the transaction noted on the Post Voided transaction slip. Using the paperwork gathered in the previous question, confirm an explanation for completing the transaction is documented on each Post Void transaction slip. Note any missing explanations using the date and transaction number in the comment section for this question.

The explanation for the Post Void transaction should make sense and should be verified, if possible, in the electronic journal.

Does each on-hand Post Void transaction receipt have the original receipt attached?

Each Post Void transaction slip should have the original receipt attached to the Post Voided transaction slip.

Using the paperwork gathered in the previous question, confirm the original transaction receipt is present with each Post Void transaction slip. Note any missing original receipts not present using the date and transaction number in the comment section for this question.

A Post Void transaction without an original receipt is a "red flag" as there should be no reason the original receipt would be missing. A "duplicate" or "re-print" of the receipt is not acceptable.

Are Paid Out/Paid In transactions logged in full on the Paid Out Log? Stores will receive funds for all store supplies by processing Paid Out transactions. Each transaction processed must be documented on the Paid Out Log in full. Paid In/Paid Out POS transaction receipts should be stapled to the Closing Worksheets. Obtain the Daily Sales Total Reports for the previous 7 days and determine if any Paid In or Paid Out transactions haver been completed by reviewing page 2 under "Description - Other". If so, gather the Paid In/Paid Out POS transaction receipts and match these transactions to the Paid Out log. Note any discrepancies.

If a Paid Out POS transaction was completed for an amount higher than the expense, a Paid In POS transaction should be completed to return the excess monies to the register.

See Supporting Document file for an example of the Paid Out Log. Do Paid Out transactions have two signatures (associate is manager issuing Paid Out, payee is associate receiving the payout)?

Each Paid Out POS transaction must be signed by a manager who is authorizing the Paid Out and another associate or payee who is receiving the monies to make the purchase. Using the transaction obtained in the previous question, determine if each Paid Out POS transaction has two signatures as required for the previous 7 days of transactions.

Coaching Points 27 Instruction

The associate (manager) performing the Paid Out transaction cannot be the associate receiving the Paid Out monies.

Is each Paid Out transaction accompanied by a detailed receipt to support the expense?

Each Paid Out POS transaction must have a detailed receipt from the vendor to support the reason for the expense. Using the information obtained in the prior questions, confirm each Paid Out POS transaction has a detailed receipt on-hand to reflect the purchase.

Coaching Points

A Paid Out transaction without a detailed receipt would require further review to determine the legitimacy of the expense. A Paid In POS transaction would be required unless the purchase can be substantiated.

28

Do No-Sale transaction receipts on-hand contain two signatures (one being a member of management)?

Instruction

A no-sale transaction can only be performed by a manager and requires another associate's signature as a witness. Use the previous 7 days of daily envelopes to determine if all signatures are present as required.

As a "best practice" an associate should note "not present" if they sign a transaction without actually witnessing it Coaching Points occur. This allows anyone reviewing the transaction receipt the knowledge that the transaction was not actually witnessed but signed after the fact.

C Loss Prevention Does the store utilize the At-A-Glance to improve guest experience and prevent shoplifting? Is this 29 system in place on the day of the audit?

Instruction

The At-A-Glance is used to provide good coverage for the store with respect to greeting and assisting all guests as well as for loss prevention purposes. Zones within the store are CW - Cash Wrap, Greeter, Zone 1, 2 and 3 or designated sections of the store, FR - Fitting Rooms, Runner and Floater. This chart will indicate the zone coverage for the day for each associate. Refer to the At-A-Glance for the day and confirm associates are working within their assigned areas and not simply waiting for guests to enter their assigned zone.

The At-A-Glance has a section "LP Focus" where the manager can call attention to different areas of the store or Coaching Points any particular loss prevention focus for the day. Review several At-A-Glance to determine if this section is utilized and discuss the opportunity for use as needed with management.

Example See Supporting Document file for an example of a At-A-Glance 30 Are fitting rooms free of merchandise, loose tickets, hangers and empty packaging?

Instruction

When the guest exits the fitting room, the associate should follow up to prepare the fitting room for the next guest.

This follow up would consist of removing any unwanted product, determining why any loose ticketing or hangers were present (may have fallen off items to be purchased or already returned to the racks). Inspect each fitting room to confirm it is free of product, tickets, packaging or loose hangers. If a guest is using a fitting room, allow ample time for the associate to prepare the fitting room for the next guest before an inspection.

Explain to associates that a disorganized fitting room or lack of controls may contribute to theft in this area. If empty packaging or loose tickets are found in a dressing room, this area may have been used to steal items.

Coaching Points Places like mirrors, benches, loose molding, above doors and ceilings are typical places to "stash" loose ticketing. A thorough sweep of the fitting rooms should be conducted at least daily if not after each use.

Are associates assisting each guest into a fitting room, writing guest's first name on fitting room door and checking on guest while in the fitting room?

Associates should be directly assisting a guest when a fitting room is used. The associate will retrieve other sizes and colors of items as the guest decides what fits. When the guest in assigned a fitting room, the associate writes Instruction the guest's first name on the fitting room door. Observe the interaction between associates and guests with use of fitting rooms.

Fitting room doors are to remain open or ajar when not in use. A guest should be escorted to a fitting room and Coaching Points the door while in use.

Are associates storing personal belongings in a secured locker while on shift? Exception applies to the 32 Store Manager and Assistant Manager who are allowed to keep belongings in the office.

Each associate is assigned a locker to be used to store personal belongings with the exception of the Store Instruction Manager and Assistant Managers, who may store personal belongings in the office. Observe the cash wrap and back room areas to confirm these areas are free of personal items.

Coaching Points Associates are encouraged to limit the amount of personal property brought into the store.

33 Are lockers free from personal locks with a combination log kept on file?

31

Instruction

Coaching Points 34 Instruction

Lockers are secured with a company provided combination lock. Associates are not allowed to secure a locker with a personal lock. Inspect each lock on the lockers to confirm it was purchased and issued by the company.

Note any personal locks in use using the associate's name in the comment section for this question. The store should have a master record noting the combinations of all locks. This can be kept in the files in the office.

The use of a personal lock violates company policy and prohibits a manager from conducting a locker inspection at any time.

Are lockers unlocked at the end of each associate's shift?

When off shift, lockers should be unlocked and should be empty of any personal belongings. Review the schedule of associates on shift and identify their lockers. All other lockers should be unlocked. Note any associates secured lockers who are not currently on shift using the associate name(s) in the comment section for this question.

Coaching Points

As a "best practice" an open or unassigned locker could be locked to prevent items from being stored in an open locker. This practice will prevent items unpaid for or unauthorized to be at work from being easily concealed.

35

Are associate's bags and coats checked by management before exiting the store (on break or end of shift) in view of video camera?

Instruction

Bags/personal items are to be checked before an associate leaves the store at the end of a shift or on a meal break preferably in view of a camera. A bag check should be conducted on every associate, including management, visiting home office associates or any visiting individual (i.e. vendor) with access to the back room.

Ask associates how the process works when a personal bag is brought into the store and what happens when they leave with the bag. This conversation should help establish what the store's normal routine is with bag checks and can be further confirmed by asking management the same questions. The store must perform this process consistently for all associates each day.

Inspection of belongings should be performed in view of a camera and at the door used for exit prior to the associate or visitor leaving. Management should never place their hands in the associate's belonging, but may Coaching Points ask to have the associate remove an item to have a clearer view within the bag. It should be stressed that this rule applies to all visitors as well if they have brought a bag into the store and brought it into a non-guest area.

36

Are clear trash bags used to store trash and are all cardboard boxes broken down prior to disposal?

Clear trash bags should be used in all trash receptacles to hold and dispose of trash. Any cardboard boxes should be flattened unless being used to hold clear trash bags or other flattened boxes.

Clear trash bags and flattened boxes reduce the chances of merchandise being placed in the trash to be Coaching Points removed at the time of disposal.

Does management inspect trash/boxes prior to being removed from the store and supervise the trash 37 removal process?

A member of the management team must inspect and/or check all trash bags, boxes and anything else taken to Instruction the garbage container before the trash / boxes leave the store. Ask associates, including a member of management, how the process works from their experience.

Instruction

As mentioned above, management must review the contents of all trash prior to it being removed from the store Coaching Points and stay available at the back door to supervise the actions of the associate during the process. Keys should not be provided to an associate to dispose of trash without management supervision.

Are headsets/walkie talkies used by management and key associates to communicate to other associates / management?

Each day management and key associates should be assigned headsets/walkie talkies to be used to communicate throughout their shift without having to physically meet one another. This means of communication Instruction is essential in potential loss prevention situations when timing is crucial. Review the use of headsets and walkie/talkies on the day of the audit to determine their level of use.

All headsets/walkie talkies should be accounted for and secured in the office each night. These devices should Coaching Points not be left unattended on the sales floor for any reason.

Are associates asking visitors/vendors for identification before being granted access to stockrooms or 39 cash wrap area and/or providing confidential information?

38

Company identification is required for all visitors/vendors before access can be granted to non-guest areas of the store as well as to confidential information. A visitor/vendor should be treated as a guest until identification can be Instruction provided or authorization for the visit confirmed. Identification should be requested upon arrival and before access is granted to non-guest areas or confidential information.

Associates should know company identification is required on all visitors/vendors even if the person is known to Coaching Points the associate based on prior visits. A visitor/vendor could have been terminated from their position since their last visit.

40 Was the backroom free from signs of potential theft?

Instruction

Walk the backroom and look for signs of potential theft. This question will be scored by responses in 40.1, 40.2, and 40.3. If all are yes, points will be awarded. If any no responses are recorded, point will not be awarded.

Unsecured product is at risk of theft or loss. Associates should understand why product is controlled and what could potentially occur if it is not.

40.1 Was the backroom free of stashed merchandise?

40.2 Was the backroom free of empty packaging, loose hangers, or loose tickets?

40.3 Was the backroom free of merchandise in non-merchandise areas?

41 Are the Loss Prevention Awareness Center Board materials posted and up to date?

The materials are distributed quarterly to the stores. The date on the materials posted is usually found at the Instruction bottom of the materials. Confirm the materials in the Loss Prevention Awareness Center are for the current date and the center is not blocked or obstructed from view.

Be sure to check email alerts for late awareness materials. If the materials in the center are not current, work with the BOD to determine if the materials are present at the store, but just have not been displayed in the center. If Coaching Points the materials are found, please make sure they are posted. Old materials can be retained and used at store meetings or for new hire training.

42 Is the store's Shrink Reduction Plan completed and posted in clear view?

Coaching Points

Instruction

The Shrink Reduction Plan allows the store to determine and share its shrink commitment and write objectives with supporting action items, owners, and due dates that directly tie back to shrink reduction. A Shrink Reduction Plan is required for all stores. Identify the location of the plan and ensure it is clearly visible.

The Shrink Reduction Plan (SRP) involves 100% associate involvement and should be frequently reviewed and adjusted as needed to address and correct the identified opportunities to reduce shrink.

43 Are action items on the store's Shrink Reduction Plan being executed?

Review the Shrink Reduction Plan and determine if the plan is actively being used to address the store's shrink Instruction problem and documented plan of action. If an action items is noted, but exceptions are found during the audit, points should not be awarded.

The Shrink Reduction Plan will help stores identify action areas. Ensuring compliance will help stores ensure Coaching Points they are focusing on appropriate areas and combating shrink.

Does the store have the previous month's High Risk POS Summary report printed and posted in the 44 backroom?

The High Risk POS Summary report is sent out each calendar month. The store should have the most recent Instruction report printed and posted on a board in the backroom.

Coaching Points This report will help the store understand %'s to sales and understand their performance.

45 Have all prior audit exceptions been addressed and corrected?

Opportunities identified on the previous audit completed by LPI should have been addressed and corrected utilizing the action plan. Compare the prior audit's opportunities to the current audit's identified opportunities to Instruction determine if deficiencies on the prior audit remain deficient and further action needs to be taken in a specific area.

The deficiency must be the same on the current audit for points to be deducted. Use N/A ONLY for first audit in the location.

Coaching Points

If compliance issues persist from the same questions on the previous audit, the action plan established to correct the issue (s) did not work. Further explore the specific action plan established to correct these issues and Coaching Points determine why this plan was not effective. Discuss with the BOD possible corrective actions to resolve the issue, which may include retraining, time management, explanation of why the procedure is important, etc.).

46

Has the District Leader completed an audit at the store in the last calendar month?

The District Leader should be visiting each store at least once per calendar month. Verify a District Leader audit Instruction was completed within the last calendar month.

District Leader audits will help ensure all areas of concern are being identified with swift action being taken to Coaching Points resolve.

47

Does the store have the last three months of self audits available for review?

Stores are to complete a monthly self audit and keep copies on file. There is no date in the month they must complete them by so if the current month has been completed, that can be considered in the answer; however, if Instruction the current month has not been completed yet, please look for the three months prior. Please note the month and the score for the last three self audits in the comment section.

Coaching Points N/A 48 Have the last three self audits been completed by at least two different associates?

Review the previous three (3) self audits. These should be completed each calendar month. Ensure there were Instruction at least two (2) different associates that completed these self audits.

Having different associates complete self audits can help prevent fraud from going un-noticed if the same Coaching Points associate completes all the audits and the auditor is the individual involved.

D Inventory Control Are shipment cases processed from oldest to newest (first in, first out) based on the dates written on 49 each shipment case upon arrival to the store?

All new shipment cartons should have the date the carton arrived in the store written on the outside. This process Instruction allows the store to work on shipment in date order. Review any shipment cartons present in the stock room and determine if cases are being worked in FIFO (first in, first out) order.

Merchandise is sent to the stores based on ordering and the need for the items for sale. If cartons are not Coaching Points processed in the order they were received, needed items would be delayed to the sales floor, which may result in lost sales.

50 Do all completed outbound ship from store orders have a corresponding order in Xstore?

Instruction

Obtain the Order Number for a sample of 5 shipments/store orders to audit from UPS labels of any outbound store orders awaiting pickup.. If store orders awaiting pickup are less than 5, audit all orders and note sample size. Reference No 1 will have order number with store number. Ex: “188958-001 -114” is Order Number 188958001 at Store 114. Search order history in the register (Xstore) to audit. To do so, have an associate log into Back Office, then click “2. Customer” followed by “4. Order Options” then finally “1. Order Maintenance”. Type the order number (ex: 147302-001) in to the Order ID field and click Process. If a message says “No orders were found…” then that order was never assigned to the store. If an order comes up, than the store order is in Xstore. Note any issues by store order number and date in the comment section for this question. See "Coaching Points" for issues that may arise with store orders.

If a package waiting for pickup corresponds to an order in Order History, but no items are shown for the order (order opens in register, but no items are listed), the order was rejected by the store and they should not be Coaching Points shipping the product out. If a package waiting for pickup corresponds to an order in Order History, but the items are not shown as fulfilled, the store most likely forgot to mark it as fulfilled. They need to ship and click “Ship Order” in the register, so the customer will be charged.

Do the physical items for in process orders (not fully sealed packages) match the packing slip. Verify 51 UPCs. Determine how many store in process orders (not fully sealed packages) are available to audit. If possible, select a sample of 5 orders to determine if the physical items by UPC match the corresponding items noted on the Instruction packing slip. Compare the physical items to the packing slips and note any differences by store order number in the comment section for the question.

Ask store associates to describe the validation process when entering the contents of store orders in the system, Coaching Points but before sealing the cases.

Are processed Buy Online, Pick-up In Store (BOPIS) orders held in a designated area, with packing slips 52 attached, and are all orders 7 days old or less?

Completed BOPIS orders should be stored in a designated area of the backroom. Each will be bagged up with Instruction the packing slip attached. Dates are displayed on the packing slip. Review BOPIS orders present in the designated area to ensure all items are current within the last 7 days.

Coaching Points N/A Is a Damage Shipment Form completed for any cartons received as damaged or shows signs of 53 tampering?

Shipments arrive via UPS and cartons are physically inspected prior to being opened. If any cases appear to be damaged or show signs of tampering, the contents should be checked and a Damage Shipment Form should be completed from the S Drive and emailed to dc@altardstate.com. Speak with the BOD and inquire on the last Instruction instance where a case was received damaged or tampered with. Using this instance, ask for the email that should have been completed to document the situation. If there have not been any cases received as damaged or tampered with, have the BOD explain the process that should be completed to confirm they are aware of how to handle the situation.

Any items received as damaged or missing from carton due to tampering should be reported. The company has Coaching Points the opportunity to recover monies for these items with the shipping service and can possibly remove missing/stolen items from on-hand inventory for replenishment.

Example See Supporting Document file for an example a Damage Shipment Form.

54 Are damages segregated between unprocessed and processed storage areas?

Instruction

Coaching Points 55

Instruction

Unprocessed damages should be stored in a designated plastic bin. As damages are entered into Xstore or processed, the items should be removed from the plastic bin and placed in a box. The plastic bin should be empty and ready for new damages to be added. Inspect the storage areas for both unprocessed and processed damages. Confirm the areas are maintained separately and are not stored in multiple areas.

If unprocessed and processed damages are stored together or in multiple storage areas, the chances of these items being processed correctly or in a timely manner decreases.

Are damages processed at a minimum of once per week by store management?

Unprocessed damage items stored in the plastic bin should be processed through Xstore at a minimum of once per week. Each damaged item should have a Damage Authorization Form attached, which notes the date the damage item was identified or received. Inspect the contents of the unprocessed damage plastic bin and verify the dates from the Damage Authorization Forms are within one week. Note the oldest date of a damaged item within the plastic bin if older than one week in the comments for this audit question.

Processing damages into Xstore allows the items to be removed from the physical inventory on-hand counts and Coaching Points replacement items to be sent to the store for sale to guests. If this process is not done in a timely manner, potential guest sales may be lost or delayed.

56 Do processed damages on-hand reflect the items noted on the Store Transfer Packing Slip?

Items processed as damaged through Xstore will generate a Store Transfer Packing Slip. This packing slip will be affixed to the outside of the storage box. Using the packing slip as reference, count the total number of items on the slip and match to the total number of items within the box to confirm the correct number of items were Instruction processed correctly. If there is a variance in the quantity, ask the BOD to re-count the total. If the variance cannot be resolved through the count, check off each item by using the packing slip to identify the error. Note the error in the comments for the audit question.

Damages are entered into Xstore as "drafts" each week to keep damages under control in the store. After the Coaching Points District Manager reviews and approves, damages are finalized in Xstore.

Example See Supporting Document file for a copy of a Store Transfer Packing Slip.

57 Do completed Store Transfer Packing Slips on file contain the District Leader's signature?

A complete Store Transfer Packing Slip is attached to the processed damage case weekly as entered into Xstore.

Several Store Transfer Packing Slips may be attached to the box until the box is full. Each Store Transfer Packing Instruction Slip should contain the District Leader's signature as proof of review. Ask the BOD for the previous four Store Transfer Packing Slips for previously processed damages to confirm the signatures are present. Note any missing signatures in the comments for the audit question.

District Leaders should understand their signature indicates that the items were verified to the Store Transfer Coaching Points Packing Slip and the slip was correct in total. If this process is not done as described, items may or may not be removed correctly from the store's on-hand physical inventory.

Example See Supporting Document file for a copy of a Store Transfer Packing Slip.

58 Are Gently Worn Items tagged correctly and placed in the sale room?

Gently worn items are damaged items deemed saleable. Items will be reviewed and marked down 50%. Once Instruction reviewed and priced, these items should be placed back on the sales floor for purchase.

Coaching Points Selling gently worn items at a discounted price helps reduce losses incurred from damages.

59 Have all Damaged and Gently Worn items been reserved in the Clarity app for RFID?

Instruction

Collect five (5) items from the sales floor that have been tagged as gently worn. These items will be found in the sale room, with a white tag stapled noting the discounted price and a brief explanation of the damage. Have the BOD log into the Clarity app to confirm these items have been marked as reserved. Once in the Clarity app, the BOD will be able to look up SKU's to determine if they have been processed correctly. Verify the sku's from the 5 items selected show as "counted reserved" or "reserved ". If any SKU's show the item as available, it is not compliant and points should be deducted.

Items processed out as damages in X Store will be removed from inventory and those items will not be sold as Coaching Points gently worn. Marking items as reserved through the Clarity app only allows them to be sold in store but not available as units to be purchased online.

60 Was an RFID count submitted after close of the prior day?

Instruction

Coaching Points 61 Instruction

The auditor should ask the MOD to show the date and time of the last submitted RFID count on the scanner. The count should be after close of business on the previous day. Note the previous count submitted by date and time if not submitted on the previous day after the close of business in the comment section for this question.

This is a quick process where MOD waves the scanner over merchandise and it counts it automatically via RFID without having to touch each ticket separately.

Are guest holds held in a designated area?

Guest Holds should be maintained on a T-stand or rack in the stock room. Note the location of holds if not in a designated area in the comment section for this audit question. Use N/A ONLY if there are no guest holds.

The audit for the holds rack should be a scheduled event each day and designated to a member of management.

Coaching Points A consistent daily audit of these holds will allow the items to be placed back on the sales floor for another guest purchase if not picked up as noted.

62 Does each guest hold have a completed Hold tag attached to the item(s)?

Guests can hold merchandise until the close of business the following day. A Hold tag must be completed to include guest name, phone number, associate name and day to be returned to stock. Note the number of holds Instruction without complete Hold tags in the comment section for this audit question. Use N/A ONLY if there are no guest holds.

Any items found in the guest hold area without a Hold tag should be removed and returned to the sales floor or Coaching Points stockroom.

Example See Supporting Document file for an example of the Hold tag.

Are guest holds limited to the close of business the following day unless authorized for extension by a 63 manager?

Instruction

Guests can hold merchandise until the close of business the following day. A Hold tag must be completed to include guest name, phone number, associate name and day to be returned to stock. Holds must be audited daily and any extension of pick-up dates by the Store Manager must be noted. Inspect the hold rack and determine if each hold is within the date noted for pick-up. Note the number of holds expired in the comment section for this audit question. Use N/A ONLY if there are no guest holds.

The audit for the holds rack should be a scheduled event each day and designated to a member of management.

Coaching Points A consistent daily audit of these holds will allow the items to be placed back on the sales floor for another guest purchase if not picked up as noted.

64 Are associate holds limited to the end of the associate's shift?

Associates are allowed to hold merchandise until the end of their shift. The same guest standard applies for a Hold tag to be completed and the word "Associate" should be written on the tag to identify the hold. Review any Instruction associate holds and confirm they are dated for the same date. Any associate holds prior to the current date should be returned to stock, unless the Store Manager approved an extension of the hold. Use N/A ONLY if there are no associate holds identified.

Associates may attempt to hold items within the stock room without using the required hold process, including a Coaching Points dated Hold tag. As time allows, inspect the stock room to confirm merchandise is not segregated or held for associates.

Are FedEx shipments verified through FedEx website to confirm all shipments were completed for 65 business purposes?

The store has a FedEx account to send ship from store orders. The FedEx account should not be used to ship for personal reasons. To review, have the store log into the tracking portal then go to filters. Under Shipment Instruction Information, Select "Direction" and set it to "Outbound" Under Shipper Information, Select "Shipper Name" and select "Store Leader“. Review recent shipments to ensure there are no unauthorized personal shipments.

A review of shipping records can also serve as a guest service verification by checking the status of a guest Coaching Points delivery time and the rates that were charged.

E Physical Security / Safety 66 Is the office secured at all times when unattended?

The office within the back room of the store should be secured any time someone is not present in the room.

Instruction Observe the office and attempt to access the room at various times during the audit to determine if the room is actually secured when unattended.

If the keys to the office door are easily accessible by non-authorized associates or the door is left unsecured, Coaching Points confidential paperwork and management belongings are at risk of being seen or stolen.

Do all managers who carry keys to the store have a completed /signed Key Holder Agreement form on 67 file?

Each key holder must have a completed Key Holder Agreement on file indicating if they have an alarm code and each specific key issued/returned. This agreement should be maintained within the associate's file. Obtain a list Instruction of all key holders within the store and confirm each has a completed and signed Key Holder Agreement on file.

Note any key holder by name and position who does not have a completed and signed Key Holder Agreement on file or if the agreement is incomplete.

Coaching Points

Each Key Holder Agreement notes key usage guidelines a key holder has accepted responsibility for when signing. This agreement can be easily referenced for the retrieval of keys if the key holder is terminated.

Example 68

See Supporting Document file for an example of the Key Holder Agreement form.

Are keys to the front, back and office doors in the possession of store management at all times?

Instruction

All store keys are assigned to a member of management and should be kept on their person or in an area that is deemed secured while on shift. Ask members of management on duty for the whereabouts of their store keys.

Keys that are unsecured provide an opportunity for a non-management member or a guest to access and use.

Coaching Points Keys maintained within personal bags are not secured as they may be easily accessed if these bags are not within a secured locker.

Are cameras and monitors operational and/or maintenance issues have been reported for service, if 69 applicable? Verify issues were reported for service via a maintenance request or email.

Inspect the monitor to confirm it displays all installed cameras and each appears to be functioning properly. If a camera view is not clearly visible on the monitor, inquire when this occurred and if a maintenance request has Instruction been submitted. If service has been requested, confirm the request by reviewing the email. If a request has not been submitted or cannot be confirmed, deduct points for the question and note specific and/or estimated date of occurrence.

It is imperative that cameras and monitors that have become non-operational are immediately reported for Coaching Points service. In order for this to happen in a timely manner, management should be reviewing the system on a daily basis to confirm the monitor reflects all camera angles and cameras reflect a clear picture of the targeted area.

70 Instruction

Is the date and time on the CCTV monitor accurate within +/- 5 minutes of current time?

Review the date and time that should be displayed on the store's CCTV monitor and compare to the current date and time. The variance, if any, should be within +/-5 minutes. Note the variance in the date or time.

The date and time on the DVR must be accurate if to be potentially used in an internal theft investigation guest / associate injury or break-in / robbery event. Management should understand how to adjust the date and time on Coaching Points the DVR. Ask if a manual for the DVR is available and help management understand how to change this data if needed.

71 Has the Monthly Detex Test Log been completed after the system has been tested?

Management is required to test the back door Detex alarm on a monthly basis to confirm the alarm is audible when the panic bar is pressed. The test is documented on the Monthly Detex Test Log, which should be posted Instruction on the back door. Inspect the log to determine if the alarm has been tested/documented each month. Use the prior month as a starting point as the date of the audit may be before the alarm test is performed in the current month.

Coaching Points

The batteries in a Detex alarm can drain at any time, which requires frequent testing. Without an audible alarm on the door, the panic bar could be pressed at any time and the door would open without a sound.

Example 72

See Supporting Document file for an example of the Monthly Detex Test Log. Are exit doors closed with emergency exit door alarms (Detex) armed and functional? (test) The emergency exit door alarm is in place to sound an audible alarm when the door has been accessed without a Instruction key. Verify the door is locked and armed. Ask the BOD to test the emergency exit door alarm (manager has keys to disarm the alarm activation) to confirm it is functioning properly.

An unarmed or non-functional emergency exit door may be easily used by an associate to exit the building or Coaching Points remove merchandise if dishonest without the alarm sounding as an alert. These doors are restricted for use to shipment and trash removal in the presence of a member of management.

73 Is the alarm call list up to date with up to 4 active Managers?

Confirm with the BOD the authorized management associates who should have alarm codes based on the current staff. DTIQ should contact the Help Desk via email at helpdesk@altardstate.com to verify alarm call list, Instruction which may have up to 4 Managers. Please do not contact the IT Help Desk via telephone. Although there may be several associates with alarm codes, they are only required to have four alarm code holders on the call list and not all active alarm code holders need to be on the call list.

The alarm codes and call list should be updated each time a key holder changes within the store. Although a prior Coaching Points key holder may have presented their keys upon termination or transfer, they still have access to the store with a valid alarm code. If this code is still active it could be used for dishonest reasons.

74

Instruction

Is the Alarm Code list up to date, with all current keyholders noted?

Confirm with the BOD a list of active managers. DTiQ should contact the Help Desk via email at helpdesk@altardstate.com to verify all managers have an alarm code assigned. Note any management associates who should have a code, but do not or anyone with a code that is no longer an employee in the store.

The alarm codes and call list should be updated each time a key holder changes within the store. Although a prior key holder may have presented their keys upon termination or transfer, they still have access to the store with a valid alarm code. If this code is still active it could be used for dishonest reasons.

The alarm codes and call list should be updated each time a key holder changes within the store. Although a prior Coaching Points key holder may have presented their keys upon termination or transfer, they still have access to the store with a valid alarm code. If this code is still active it could be used for dishonest reasons.

75

Do managers have their own alarm code and keep their codes confidential, not sharing codes with other managers/associates?

Instruction

An alarm code is provided to each authorized management associate to arm and disarm the store's alarm at opening and closing each day. Ask members of management on duty how alarm codes are handled for new management or visiting managers who are covering from other locations. A follow-up question may be asked of member(s) of management or associates on duty if they have been provided an alarm code that is not their own.

If so, please note the circumstances and confirm codes have or will be immediately changed.

If alarm codes are shared, it would be difficult (if not impossible) to know who actually accessed the store, if camera coverage is not available. There is no reason another management or a non-management associate Coaching Points should be aware of an existing code. Proper channels should be followed if an additional alarm code is needed for coverage and simply sharing a code should not be an option.

Are "permanent" off-site storage locations secured and is entry/key(s) accessible only to authorized 76 management associates? This question only applies to stores with permanent offsites.

Instruction

This question only applies to 167 Southpark, 141 Southlake, 161 Baybrook, 160 International Plaza, 136 Short Pump, 172 Perimeter. All are on mall property. Off-site storage locations will temporarily increase during holiday times in other stores. Visit the off-site location to determine it is secured when not in immediate use. Confirm the whereabouts of the off-site storage keys and where these keys are kept (secured) when not in use. Note the location of the off-site storage keys in the comments for the audit question if not secured.

Coaching Points

The off-site space should be used primarily for processed apparel. Shoes and jewelry should not be stored within this site. Off-site storage should be used for replenishment, not for new receipts, whenever possible.

77

Are fire extinguishers hung, gage in the "green" zone and inspected within the last 12 months?

Instruction

Each fire extinguisher should be properly mounted to the wall. Review the gauge on each fire extinguisher to confirm the arrow is within the "green" zone indicating it is properly charged. A service or inspection tag will note the last date of inspection by month and year. This inspection is valid for 12 months. Confirm the location of each fire extinguisher and determine if each is mounted and the previous inspection was completed within the prior 12 months. Notify the BOD if an issue is found that requires service.

Although fire extinguishers are inspected every 12 months, it does not mean a fire extinguisher won't require service during the time between official inspections. A "best practice" would be to inspect the fire extinguishers Coaching Points each month at store level to verify the charge is within the "green zone" on the gauge and request service as needed. This will avoid a situation where a fire extinguisher is not usable in an emergency situation.

78 Instruction

Are fire exits clearly marked and accessible (free of obstacles with the exception of shipment in process) with exit lights illuminated?

An emergency exit needs to be clearly marked, illuminated and accessible for both guests and associates in the event of an emergency where this exit is needed. Confirm the emergency exits are marked by a visible sign, no obstructions are blocking an exit path and all exit lights are illuminated.

If an exit path is obstructed, usually by trash or shipment boxes, assist the store associates in removing the obstruction. Discuss normal activity that would create an obstruction in this pathway and alternate ways of Coaching Points handling the situation to always have a clear path to an exit. Keep in mind that an unannounced Fire Marshall inspection could lead to a fine if an obstruction was present at the time of the inspection.

79 Instruction

Are emergency exit lights functional when tested?

Each emergency exit sign has a button, which when pressed tests the lights. Identify the location of each exit sign and test the unit to confirm the lights illuminate when the test button is used. Notify the BOD of any emergency lights that did not illuminate when tested.

Coaching Points These lights are essential in ensuring the safety of associates and guests in the event of an emergency.

F 80

Shrink Awareness Can associates explain how to check large bills for counterfeit? (Ask Two Associates) All stores have counterfeit pens they should use to check the authenticity of bills over $20.00. Associate should Instruction either state they use the pen(s) or visually inspect the bill for watermark, security strip, etc. Award 1 point for each correct answer.

Coaching Points N/A 81

Are associates aware of the location of the Anonymous Hotline telephone number? (Ask Two Associates)

The Anonymous Hotline is an option if an associate does not feel comfortable to report the issue through the chain of command. The associate should be encouraged to use the chain of command first if they feel comfortable reporting the issue to their supervisor. The Anonymous Hotline is a third party hotline available 24 Instruction hours a day for reporting knowledge of on-the-job theft, fraud, time abuse and/or violations of company harassment or discrimination policies. Ask associates on duty where to locate the Anonymous Hotline number.

Award 1 point for each correct answer.

If any associate is not aware of where to locate the Anonymous Hotline number, show them the poster in the Coaching Points stockroom.

82 Do associates know the function and use of the Anonymous Hotline? (Ask Two Associates) The Anonymous Hotline is an option if an associate does not feel comfortable to report the issue through the chain of command. The associate should be encouraged to use the chain of command first if they feel comfortable reporting the issue to their supervisor. The Anonymous Hotline is a third party hotline available 24 Instruction hours a day for reporting knowledge of on-the-job theft, fraud, time abuse and/or violations of company harassment or discrimination policies. Ask associates on duty what the function of the hotline is and how it should be used. Award 1 point for each correct answer.

In discussions, ask associates if they have ever thought of using the line and why. This may lead to further Coaching Points clarification of the line or a reason why the line should or could be used.

83 Are associates aware of the monthly newsletter topic? (Ask Two Associates)

Instruction

Review the monthly newsletter prior to discussing the topic with store associates. Ask associates on duty to discuss the current monthly newsletter topic and a brief summary of its contents. The goal of the question is to determine if the associates are actually reading the newsletters on a monthly basis and understand the contents.

Answer any questions the associates may have on the subject. Award 1 point for each correct answer.

Confirm associates are aware the monthly newsletter is posted in the Loss Prevention Awareness Center within the backroom.

84 Can associates elaborate on the monthly newsletter contents? (Ask Two Associates) Review the monthly newsletter prior to discussing the topic with store associates. Ask associates on duty for a brief summary of the current month's newsletter contents. The goal of the question is to determine if the Instruction associates are actually reading the newsletters on a monthly basis and understand the contents. Award 1 point for each correct answer.

Coaching Points Answer any questions the associates may have on the subject.

Example See Supporting Document file for an example of a Store Incident Report Form.

Are associates aware of the previous physical inventory units and dollars lost per day as noted on the 85 store's Shrink Result poster? (Ask Two associates) Coaching Points

Instruction

The Shrink Result poster should be displayed in the stock room in an area that is highly visible to associates and management. The poster should have the most recent physical inventory result noted as the percentage of inventory losses to store sales, dollars of inventory shrink and total units lost. To breakdown the information so an associate can easily understand, the units per day loss and the dollars per day loss are noted under "What is that per day?". Ask associates on duty to recall the store's units and dollars lost per day. If the associates do not know this information or cannot recall the correct numbers, guide them to the Shrink Result poster and explain the information. Award 1 point for each correct answer.

As time allows, discuss with associates and management how they are impacting the shrink result numbers on a Coaching Points daily basis. Ask what they believe is causing the shrink in their store and relate the activities described to impact the numbers to help assist in their shrink efforts.

Example See Supporting Document file for an example of a Shrink Result poster.

86

Do associates understand what steps should/should not be taken if a guest attempts to leave the store without paying for merchandise or is suspected of shoplifting while in the store? (Ask Two associates)

Instruction

Associates may or may not understand how to handle a shoplifter. Through discussion, ask associates to explain how they would handle potential shoplifters in both situations noted in the question. An associate should be using superior guest service to deter a guest from shoplifting. If the guest is thought to have concealed an item, the associate should use "recovery statements" in an attempt to recover the merchandise. The associate MUST understand they cannot accuse (potential lawsuit), touch (physical altercation) or pursue (cause harm to others) a potential shoplifter. Use role play and present situations that will illustrate these points until the associate has a clear understanding on how to handle these situations. Award 1 point for each correct answer.

The associate's safety is the most important thing to the company and an associate should not put themselves in a situation (i.e. restrain, chase or confront a shoplifter) where they could possibly be harmed. Emphasize the use Coaching Points of "recovery statements" and using superior guest service as a deterrent while the potential shoplifter is in the store in an attempt to avoid the situation. Remove the "opportunity" for the guest to become the "shoplifter".

Do associate's understand the use of recovery statements (non-accusatory) when dealing with a potential shoplifter? Ask for examples. (Ask Two Associates) Recovery statements are non-accusatory, non-threatening customer service statements aimed at regaining possession of our merchandise when you suspect someone is trying to steal. The key phrase in the definition is non-accusatory, as in reality, a recovery statement is really no different than suggestive selling. Associates must be Instruction comfortable using these statements in all areas of the store including the cash wrap and fitting rooms. Ask associates to explain how he/she would attempt to prevent external theft utilizing a recovery statement. Help educate associates on these techniques if their explanation does not provide adequate action. Award 1 point for each correct answer.

An actual theft has not occurred until the shoplifter passes the point of purchase without presenting the items for purchase / payment. The company does not promote apprehension and does not provide education to Coaching Points management on the proper steps to follow in these situations. Using recovery statements is a method to address a potential shoplifter, but the best approach is excellent customer service. It is against company policy to apprehend a shoplifter in the store.

Can the team identify the three primary sources of shrink and provide examples of each? (Ask Two 88 Associates) 87

Instruction

Shrink in a retail environment has three primary sources; internal, external and paperwork errors. Speak with management associates on duty to determine if they know the three primary sources of shrink and ask them to provide an example of each. Ask TWO members of management (if available) and record their names in the comment section. Educate the management associates on examples of each as well as how each generally contributes to a store's shrink. Note the names of the management associates who did not know the three primary sources of shrink and/or could not provide examples. Award 1 point for each correct answer.

Management associates who understand how shrink is caused can better assist in helping to identify situations Coaching Points creating shrink and to be part of the solution and not the problem. This information should be shared with all associates as shrink reduction is a team effort.

89 Are associates aware of the behavioral clues of a potential shoplifter? (Ask Two Associates)

Instruction

We can prevent most external theft through attentive guest service, being knowledgeable of methods dishonest guests use, and by staying alert to potential dishonest behavior. The most common form of external theft is shoplifting. While there are no physical characteristics to identify a potential shoplifter, there are behavioral clues that may indicate a guest is attempting theft in your store.

Behavioral clues of a potential as a follows: •Inappropriate clothing i.e. overcoat on a hot day or a raincoat when it is sunny •Carrying empty bags, boxes that can be used to conceal stolen merchandise •Taking merchandise to secluded areas of the store •Constantly looking around instead of at merchandise on the shelf or in their hands •Walking into the stockrooms, behind counters or other places barred to the public •Monitoring the movements of associates •Repeatedly sending associates to look for products •Looking up/around for security devices, especially CCTV •Removing product from packaging Award 1 point for each correct answer.

When confronted with a shoplifting situation: always discreetly alert management, provide great guest service and Coaching Points document the specifics of the incident. Never lose sight of a shoplifter, accuse a guest, follow a shoplifter out of the store or detain a shoplifter.

Are associates aware of QA process for accuracy and packing guidelines to minimize damages in transit 90 and guest presentation? (Ask Two Associates)

Instruction

Ask 2 associates to describe the QA process for store orders on accuracy, preventing damages and for guest presentation. The receipt should be used to cross reference all items to be included within the box that were part of the sale. All order should be shipped within an appropriate size box with bubble wrap at the bottom, for fragile items, and tissue paper. Soft items are placed in the box first with fragile items to be placed on top. Each fragile item should be wrapped initially in tissue and sealed with a sticker. Additional bubble wrap should be used as needed on fragile items and to fill any remaining space in the box to prevent items from moving in shipment. Any gifts with purchase should be included along with the envelope with receipt on top prior to sealing the box. A "fragile" sticker should be used when fragile items are contained in the box. These stickers should be placed on opposite corners to be clearly visible when moving through the shipment process after leaving the store. Award 1 point for each correct answer.

Candles should always have tissue placed between the candle base and the lid. In addition, candles should be placed in the box standing up to prevent damage from being placed on their side.

91 Are associates aware of how to respond to an active shooter situation? (Ask Two associates) Active shooter situations are unpredictable and evolve quickly. Individuals must be prepared both mentally and physically to deal with an active shooter situation. Speak with associates on duty on how they would handle an Instruction active shooter if the situation arose. Use the "good practices" noted in the Coaching Points below to guide the conversation. Award 1 point for each correct answer.

Good practices for coping with an active shooter include; be aware of your environment and any possible dangers, take note of the two nearest exits in your store/mall, if you are in an office, stay there and secure the Coaching Points door, if you are in a hallway, get into a room and secure the door and as a last resort, attempt to incapacitate him/her. Remember guests are likely to follow the lead of associates and managers in this situation (evacuate, hide, take action).

Are Associates aware of what Exception Based Reporting is and how Altar'd State uses it? (Ask Two 92 Associates) Coaching Points

Answers should include a general understanding that POS transactions are monitored and exceptions are reviewed. We should talk about refund frequency, discounts and other suspect transactions. Award 1 point for each correct answer.

Coaching Points Awareness that transactions are being reviewed will help act as a deterrent.

Are Associates aware of what the store's % of returns to sales is and why it's important to monitor? (Ask 93 Two Associates) Answers should match the High Risk POS Summary report that is sent each month and posted in the backroom.

Instruction Award 1 point for each correct answer.

Instruction

Coaching Points Associates should understand how they are performing to help increase profitability and reduce returns.

Are Associates aware of what the Associate Discount policy is and who is eligible to receive? (Ask Two Associates) Answer should include 50% off for wearable items (apparel, jewelry, accessories) and 30% off for all other Instruction regularly priced merchandise. No discount on sale items. Only associate, spouse and dependent children are eligible for the discount. Award 1 point for each correct answer.

Ensuring knowledge of the associate discount will ensure discounts are not being given out outside of the policy Coaching Points by an associate offering or the cashier allowing the transaction.

95 Are Associates aware of how to handle a no receipt refund? (Ask Two Associates) 94

Instruction Coaching Points 96 Instruction

Answer should include attempting to locate a copy of the receipt through search or capturing and entering ID. Associates are not allowed to return items without an original receipt. Award 1 point for each correct answer.

Original receipts help ensure items are being returned in accordance with policy, and items are returned at an accurate price.

Are Associates aware of the proper ways to enter and exit the store? (Ask Two Associates) Associates should only be entering and exiting the store at the beginning/end of their shift through the front door.

Bag checks should be completed at the time of exit. Employees should not be entering/exiting through the back door at the beginning/end of their shift. Award 1 point for each correct answer.

Entering and exiting through the front entrance with a bag check helps ensure no merchandise is exiting that has not been paid for.

97 Are there any causes of shrink in the store you want to make me aware of? (Ask Two Associates) DO NOT INCLUDE NOTES ON AUDIT. Any identified concerns should be discussed with the Program Director Instruction and emailed to Program Director, Brett Eiffert (brett.eiffert@altardstate.com), Jeff Sink (jeff.sink@altardstate.com), and Patrick Barr (patrick.barr@altardstate.com).

Coaching Points N/A Coaching Points