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Accounting for food fraud

Member: Nifa

Although more often associated with white-collar fraud, a leading academic argues that forensic accounting can track food fraud and should be used by the UK Food Crime Unit as a matter of routine.  Lisa Jack, Professor of Accounting at the University of Portsmouth contends that food fraud is a fraud issue like any other and must therefore be looked at from an accounting point of view. Professor Jack, who contributed to the Elliot review into the integrity and assurance of food supply networks maintains that it is not enough to analyse a firm’s supply chain weaknesses when considering its resilience to food fraud but that the whole business should be scrutinised.

As far as she is concerned, forensic accounting experts should be engaged to assess how vulnerable the firm’s accounting systems are to abuse and anomalies in the supply chain and to look at the business as a whole rather than focusing on individual functions. As she said, if fraud is being assessed, everyone in the company should be aware of it, not just the small groups of people engaged in vulnerability assessments.  An analysis of paperwork and accounting processes will highlight areas of vulnerability within the firm, such as overly complex supply chains, inconsistent payment periods, methods and charges. Professor Jack also advocates random checks in a bid to spot aspects of supplier relationships that are out of the ordinary based on paperwork.

Forensic accountants can identify the weak spots in a business by running tests that pick up on anomalies and suggest areas for further investigation, such as relationships between suppliers and buyers that might be too cosy. As she points out, vulnerability assessments in the UK are usually done by food safety experts, not forensic accounting experts, which is how they are conducted in Holland and Denmark.  This means that areas of concern may be overlooked.

Author: Roger Isaacs, 23 March 2015

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