Audit Kiosks and Carts to Verify Their Gross Sales

If you grant a license to kiosks and carts to conduct business at your center, make sure that you audit the books and records of a set percentage of those kiosks and carts each year to verify their gross sales, recommends international financial management consultant Kenneth S. Lamy. In his experience, kiosks and carts frequently submit gross sales statements that underreport their gross sales, Lamy says.

Assuming your kiosk or cart license agreement gives you the right to audit, auditing the kiosks or carts helps deter them from underreporting their gross sales—and underpaying their percentage rent, says Lamy. Since kiosks and carts can generate many sales, a lot of percentage rent may be at stake, he warns. The experience of an audit may be enough to motivate a kiosk or cart to report its future gross sales more accurately, Lamy adds. There's also another benefit to auditing: It helps you keep tabs on how a kiosk's or cart's business is doing, notes Lamy. And that may affect your decision to renew its license agreement, he points out.

If you have many kiosks and/or carts at your center, audit 25 percent to 33 percent of them annually, Lamy recommends. That's less time-consuming and expensive than auditing every kiosk and cart each year, he notes.

But don't audit that percentage of kiosks and carts all at once. In January, audit kiosks and carts that will operate at your center during the end-of-year holiday season (typically from October to January), says Lamy. This way, you won't interfere with their peak sales times. Later in the year, audit kiosks and carts that will operate at the center during other seasons or throughout the year, he adds.

Don't limit yourself to auditing the same few kiosks and carts over and over again, Lamy says. You'll get a more accurate reflection of the gross sales figures of kiosks and carts at your center if you make different kiosks and carts subject to your audit each year, advises Lamy.

CLLI Source

Kenneth S. Lamy: President, The Lamy Group, Ltd., New Orleans, LA 70130