Snap A Control

The Gas Station Industry

April 15, 2015

Authors:

Melissa White and Aeron Brown

Snap a Control: A Gas Station Industry

Team Members
Our team consisted on three members: Melissa White, Aeron Brown and Yiang
Chen.
Our group started the project by determining what sector or industry area we
wanted to research, and what venues in that industry specifically. After a little
discussion and based on Melissas experience, we decided on gas/fuel stations.
There are quite a few risks involved with gas stations so we brainstormed risks, and
the controls that could, and should be enabled. The list is attached at the back of
this report for the readers convenience.
We initially had three group members, but one group member was inactive in our
discussion, and our multiple attempts to talk to him were returned with either
silence, or empty promises regarding content. We made the executive decision to
boot him from the group after discussing with the professor.
We took a look at four different gas stations, from four different companies;
MurphyUSA, QuickTrip, Kroger, and Shell. We split up the gas stations with Melissa
taking MurphyUSA, and QuickTrip, while Aeron took Kroger and Shell. Theft risk,
Pump operation/maintenance risk, and health and safety risk are the three risks we
looked at across all of the stations. For each station we discussed and looked for
different controls to counter those specific risk. Some stations approached certain
risks one way whereas others took a different approach.
At most of the stations everything seemed up to the specified regulations, except
for the Shell station. There were issues with security strips missing from the gas
pump credit card area, and no fire extinguishers in their designated spots. There
was some ATM risk that we hadnt even specified, but was so blatant that we felt it
must be mentioned.
Overall it was a great experience that enabled us to acknowledge real world risk
and controls.

Internal Control
Internal control is a process designed to ensure reliable financial reporting, effective
and efficient operations, and compliance with applicable laws and regulations. It is
important to set various controls across the whole organization. The five main
controls that we focus on are:

Controls to Safeguard Assets,

Controls on Health and Safety,
Controls to Ensure Financial Information is Accurate and Reliable,
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Controls to Ensure Compliance with Financial and Operational Requirements,

and
Controls to Assist in Achieving the Businesses Objectives.

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Controls to Safeguard Assets

Physical control of assets allows the organization to protect the companys assets.
These include the use of time locked safes, cash registers, and locks. Ensuring that
each of these controls are functional and being used appropriately is eliminate loss
caused by theft. Some gas stations, such as Murphy USA use InstaKeys for their
sites. It is a unique away to change out their locks without the need of a locksmith.
When there is need to replace the lock, all you need to do is remove the core and
replace it with a new one. If someone tries to use the wrong key, the core will
come out and not allow individuals to break into the site. Proper authorization
allows an organization to restrict access to certain programs and/or functions. This
usually is based on job title and duties. Regularly updating computer passwords
helps to further protect access. This also helps to avoid
giving any one employee total control over a process. This is
not always viable in small retail outlets such as gas stations.
With limited personnel, employees are responsible for many
operations across a process. Ensuring proper management
supervision and independent checks can help limit misuse of
company assets.
Figure 1: A security
Gas stations have multiple concerns when it comes to
camera
safeguarding their assets. There is a need to safeguard
against theft from customers and staff. Installing security cameras (see Figure 1)
can be deter potential theft. Both Quik Trip and Murphy USA use security cameras
to monitor their sites. Individuals known as short-change artists are quite skilled
at confusing employees and getting large amounts of money before the cashier
even knows what has happened. The best way to avoid these kinds of theft is to
properly train all employees on what to look for and how to handle the situation.

It is always good to keep good relations with competitors. There are ways at the
gas dispensers to override the machine to allow for free gas. Those thieves that
bypass the controls tend to hit multiple gas stations from different companies in a
localized area. Their hopes are that they can get in-and-out with the gas without
allowing companies to get an accurate description to them or their vehicles. By
having open communications organizations can help each other catch those
responsible.

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Gas stations have a lot of large machinery. Ensuring that

every piece is fully functional and working allows
organizations to protect this equipment. Kroger Fuel has
installed new equipment in some of its sites. It is
important to monitor tank conditions and gas levels. If
too much water gets into the underground tanks, it can
cause issues in the gas dispensers and the customers
vehicles. Performing stick tests can help prevent
Figure 2: Security tape on
potential issues. Also running automated fuel tracking
a Murphy USA pump
systems can alert employees to unseen issues. This is
also a great way to verify fuel quantities that are delivered to ensure that you
received everything on the invoice. This can easily be done by running various
VeederRoot tests.
Gas stations are also responsible for ensuring that their gas dispensers are fully
operational. Checks to ensure that they have not been tempered should be done
periodically. Thefts of information can be done by placing a skimming device
attached to the card reader just inside the unit. Simple
measures, such as using security tape (see Figure 2) and
changing out the original locks, are easy and inexpensive
methods to protect customer information. Murphy USA has
recently rekeyed all of their pump locks. They installed
registered unique keys for each site. Both Murphy USA and
Shell ensure that new security tape is attached to pumps
Figure 3: A breakaway
daily to ensure that the pumps have not been tampered with.
Daily equipment check to the dispenser units and hanging hardware helps maintain
the health of the pumps. Ensuring proper equipment is used, such as breakaways
(see Figure 3). A breakaway is designed to split in half, sealing both ends, in case a
customer drives off with the nozzle still in their gas tank. It helps limit expensive
repairs to fix broken gas dispensers. Breakaways are used at Quik Trip and Murphy
USA.

Controls on Health and Safety

Ensuring that proper health and safety controls are in place will help protect a
companys customers, assets, and the environment. A written workplace hazard
control program should outline methods that should be used to control outcomes of
undesirable events. These should also be monitored to ensure that they are
effectively applied. Something as inexpensive as maintaining a first aid kit is a
great example of assisting anyone that may experience an accident.
To help prevent any accidents from happening, there are many safeguards that
companies can put in place. Safety cones and reflective safety vests should always
be used by employees if they need to do any maintenance or clean up outside. This
will allow drivers to be more aware of employee movement. It is actual Murphy USA
policy that if a pump needs maintenance on it, the employee, while wearing a
safety vest, will use their vehicle to block off the other side of the dispenser (both
are electrically tied together), and take four safety cones to block off the side that
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they are working one. In case of a gas spill, gas stations should have gas spill
cleanup kits for fast reaction time. This can include quick soak pallets, broom, dust
pan, and sorbent pads.
It is law that certain safety and caution signs be located at the
pumps. These signs include information regarding static
electricity and proper fueling techniques. In case of fire or open
flame near the pumps, gas stations are required to have
emergency shut-off buttons and fire extinguishers. An emergency
shut-off button stops the flow of gasoline to the dispensers (see
Figure 4). These pieces of equipment should be located both
inside and outside of a gas station building for quick use. Gas
stations should also have handy the phone numbers for emergency
not hesitate to call 911 if an emergency occurs.

Figure 4:
Emergency Shutoff Button

response and

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Controls to Ensure Financial Information is Accurate and Reliable

Internal controls ensure that management has accurate, timely and complete
information. This information is just to plan, monitor and report business
operations. In a small gas station, it is not easy to segregate duties. With few
employees, an individual needs to perform many duties. For example, the person
who orders, might also be the person receiving and stocking the inventory, and
keying the invoice into the accounting software. Since this is very common with
limited personnel, it is important to have a few independent and validation checks.
Regular reconciliation of accounts should be conducted and having an external
auditor to verify inventory levels and financial status periodically is important.
Gas stations need to ensure that all assets and liabilities actually exist. For
example, checking the volume of gas in the tanks, before and after a fuel delivery,
and comparing the difference to the fuel invoice is a great way to ensure that the
invoice is accurate.
Other controls that can help ensure that the financial information is accurate and
reliable are:

The records cover the whole story and are complete,

All liabilities, rights and obligations are included,
All entries have been allocated to the correct accounts,
All relevant information has been disclosed,
Number documents such as checks sequentially to avoid duplication,
Automated controls such as valid date ranges or dollar value limits,
Comparisons between budgeted and actual figures,
Procedures for authorization of payments,
Exception reports,
Approved authority levels.

Controls to Ensure Compliance with Financial and Operational

Requirements

Gas stations need to ensure that they are in compliance with both financial and
operational requirements. There are certain gas regulations that require
organizations to posted documentation in customer view proving that they are in
compliance with state and federal laws. Some of this documentation requires
certain external parties to come to each location to inspect the site.
Any retailer should have ways to monitor the controls. This can be done by
obtaining feedback from both customers and employees. Setting up processes for
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but consumer complaints/comments and yearly staff feedback surveys are great
ways to monitor compliance.
Other methods can overlap with previously stated controls. Proper ordering
procedures and inventory management, physical controls to prevent accidents,
conducting audits, and ensuring that all procedures are well document would also
help any gas retailer to ensure compliance with financial and operational
requirements. Murphy USA has the store manager conduct weekly audits, the
district manager conducts monthly, and an external auditor will conduct quarterly
audits to ensure that the both the financial and inventory levels are in compliance
and accurate.

Controls to Assist in Achieving the Businesses Objectives

Any type of business risk could have negative effects on trying to achieve business
objectives. To respond to these risks, management needs to develop strategies and
controls that would enable the organization to meet its objectives. One of the key
assets that can have a large effect on the business objectives is hiring and training
the right personnel. Undertaking reference and background checks on new staff to
ensure they do have essential qualifications is the first step to proper hiring.
Managers should also check out any education credentials that are essential to the
operation of the business and ensure adequate training is provided. Clearly
outlining responsibilities and expectations, providing appropriate supervision of
staff, and undertaking performance reviews with staff can help keep employees on
track for achieving the organizations objectives.

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