Firms need to access the vulnerability of their systems, Lisa Jack, professor in accounting at the University of Portsmouth, told delegates to Food Manufacture Group's Big Video Debate, Food and drink fraud: protecting your supply chains, at the Foodex show held at the National Exhibition Centre near Birmingham last month.
“At the Centre of Counter Fraud Studies in Portsmouth, we are interested in this problem as financial fraud. It’s not as much about food, although that's important and you don't want any food safety issues,” said Jack.
“But we are also interested in it from the point of view that it has been a systems problem or a management control problem – an accounting problem. And we certainly think that it can be tackled using counter-fraud accounting techniques.”
Terrorist funding
Jack noted that food fraud didn't always occur in isolation and could be associated with other criminal activities, such as duty evasion, smuggling, extortion – even terrorist funding. Using counter-fraud techniques, it is possible to make the food and drink industry more resilient against fraud, she claimed.
Also speaking during the debate, chaired by Food Manufacture’s group editor Mike Stones, were Andy Morling, head of Food Standards Agency’s Food Crime unit and Professor Tony Hines, crisis management expert at Leatherhead Food Research.
Average level of fraud
Jack reported on surveys that found that for all companies across all sector, the average level of fraud was estimated to be 5.47% of their turnover.
“If you apply that to the top 75 companies in the food and drink industry, you have around £11bn every year, but that isn't just food fraud,” she said.
“Our argument is that if you protect yourself against food fraud, you will be more resilient against other types of fraud and the cost of reducing fraud in your organisation will pay for any measures that you take to protect yourself.”
Meanwhile, to see an exclusive interview with Food Crime Unit head Andy Morling about food fraud and protecting supply chains, click here.