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Agreement Comes About Through Forensic Accounting

Member: Nifa

Following encouragement by the Groceries Code Adjudicator (GCA), eight major grocers have made voluntary commitments to put a time limit on forensic investigations of suppliers' accounts that have sometimes seen questionable demands made of suppliers over historic rebates or payments.  The move comes after the new Groceries Code Adjudicator, Christine Tacon, found that supermarkets and other food retailers have been using forensic accountants to examine emails up to six years old in an attempt to claim payments over the quality, quantity or timing of deliveries that could run into millions of pounds. 

The eight stores, including M&S, the Co-operative Group and Asda, have agreed to limit their search for missed claims in suppliers’ trading accounts to the current and two previous financial years. This will be on a reciprocal basis where suppliers agree to make the same commitment.  The agreement will considerably reduce the burden on suppliers in responding to claims from retailers. This is because after a long interval the documentary audit trail can be complex and difficult for suppliers to piece together and requires considerable effort, particularly in cases where key personnel have moved on.

The reason why the grocers decided to use forensic accountants in the first place is that they are expert at finding anomalies or incorrect financial information in documents such as emails and invoices.  When the GCA was first made aware of the practice when she took up the post a year ago, she was amazed at the amount of money the accountants were finding and, in many cases, the bills being presented to suppliers were eye-watering.

Of course, the forensic accountants were merely doing the job they had been paid to do, meaning that, in many ways, the voluntary agreement is a measure of their success.

Author: Roger Isaacs – 30 June 2014

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