The Function of Information Systems in Identifying Fraud in Retail Businesses
| Published date | 01 January 1993 |
| Pages | 11-19 |
| Date | 01 January 1993 |
| DOI | https://doi.org/10.1108/eb025604 |
| Author | John Burrows |
| Subject Matter | Accounting & finance |
The Function of Information Systems in
Identifying Fraud in Retail Businesses
John Burrows
John Burrows
is a principal of crime management
consultants Morgan Harris Burrows. He
was formerly a principal research officer
in the Home Office and has conducted
research on many aspects of business
crime,
crime prevention and policing.
Between 1986 and 1991 he was the
Security Adviser to the Dixons Group of
companies, where this paper was
originally prepared. He is Visiting Fellow
at the Centre for Risk Management,
Cranfield Institute of Technology and a
member of the CBI/Crime Concern
Working Group on Business Crime.
ABSTRACT
The aim of this paper is to emphasise the
pivotal role that information systems, of
various kinds, play in both identifying fraud
committed against the medium to larger
retail concern and in investigating who has
been responsible. Reliable statistics on
retail fraud are difficult to come by, but the
paper summarises some of the information
available from Government, police and retail
sources and the arguments for exercising
rigorous control. It then goes on to examine
some of the prerequisites if information
systems are to combat fraud effectively.
Attention is focused on the sales audit,
stock audit and security functions, and
examples of applications in each of these
fields are provided.
INTRODUCTION
Three observations can be made about
fraud — and particularly fraud in the
retail context.
1 The value of recorded frauds more
than outweighs all other property
crimes. Fraud is the only offence in
the Home Office 'Criminal Statistics'
which docs not incorporate statistics
on value (a convention that has
attracted criticism).1 Nonetheless this
assertion can be supported. In 1988,
for example, the cases dealt with by
the Metropolitan and City Police
Fraud Squad alone totalled £4.2bn at
risk, whereas the total loss for all theft,
robbery and burglary in the whole of
England and Wales was less than half
that sum.2
2 Retailers are amongst the biggest
losers.
Here again Home Office
figures have their limitations: they do
not separate losses by type of loser.
Corporate victims clearly account for
the lion's share of cases dealt with by
police fraud squads3 and the accolade
(or wooden spoon) must certainly go
to the Treasury which, on their own
'guesstimate', lose revenue from tax of
about 7 to 7.5 per cent of GDP an-
nually.1 But a 1988 survey by the
Home Office Working Group on the
Costs of Crime1 indicated that banks
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