A visit to the local small supermarket which does not belong to the big chains that have the last invention equipment for preventing from fraud shows multiple possibilities of performing small crimes that, if they persist, can cause big damages to the owner.
There are five departments in the store: food (fresh and frozen) department; fruits and vegetables department and department for different house wares. The biggest is the food-staff department which occupies about three thirds of the place of totally 600 sq. m. At the exit gate there is a small kiosk for cooked food and sweet shop. The visitor immediately notices that the arrangement is similar to the big chains’ supermarkets and the running processes’ organization is quite similar too. The difference here is in the smaller scale of exhibited goods, the number of suppliers, the origin of the goods (usually they are from the near states) and the equipment that is installed in the supermarket.
Nevertheless this supermarket is not a big scale business typical for the big chains of supermarkets it has its leakages and needs an internal control. The answer to the question what is an internal control includes everything connected to the business: methods or procedures that are adopted by the management to ensure that the assets are secured, the financial information is precise and accurate, financial and operational requirements are compliable with each other and that the internal control contributes to the achievement of owner’s goals.
Carefully observing the situation in the supermarket, the customers and the personnel, the impression that a fraud may be performed by both is confirmed. It is hard to assess who may be more active but both are imposing damages to the business. According to the 2012 Report to the Nation on Occupational Fraud and Abuse, carried out by certified fraud examiners, cited by Susan Cambel and Judy Nartcher in their book Internal Controls for Small Business, the small business endured median losses of $147 000. (Campbell & Hartcher, p. 4) It was also reported that the incidents related to employees fraud and theft were increasing. The small businesses are extremely vulnerable to employees’ fraud and it is possible for a small business to be bankrupted by a single employee’s fraud or theft. (Ibid)
The first important circumstance that is easy to be noticed is the absence of special surveillance equipment as cameras at the exit where the payment is performed. If there is any, it will be very difficult to operate properly because the place is small, congested with directly offered items as sweets, chocolates, chewing gums, etc. that it is difficult to put properly the staff one has bought and it is easy some items to be smuggled out by customers. At the same time, when it is overcrowded, it is possible for the cashier to mark and calculate more items or more expensive items than the customer has actually bought. There are many ways for the employee to collect the difference in the prices even sometimes it is done by a well-organized group of employees.
Another very weak point is the direct contact between the customers and the goods that are offered. Some unscrupulous customers, with criminal intend, may change the packing of the goods, for example to put more expensive item in the packing of a cheap one. Simple example is to put a bottle of wine that costs $120 in the box of $15 bottle of wine. How many customers can do this for a day, five, ten, fifteen or more? And, of course, the shoplifting is very popular between the customers and the employees.
Another weakness is the paying with checks and the electronic cards that do not need additional verification. The pickpocketers are at their places and once picking a card they are able to buy expensive goods. Because many supermarkets have settled limits for cards with no further verification the stealing of personal data about cards is already a question of organized crime which is facilitated by the weak control at the pay desks in the rush hours. The second string cards also are good business where additional verification is missing.
Passing by the room of the chief manager, I asked him for permission to share the conclusions I made from my observation with him. He invited me saying that a feedback regarding different issues is always welcome. He said that the security equipment is really a weak point in the supermarket and that the owner intends to invest more, when possible, in buying modern, well operating devices and systems. Regarding the personnel he said that they had started a partner program which means that every employee who shows perfect skills and good loyalty to the business enters a special program for becoming a partner in the business. He added that the program had great effect not only in relation to the skills of the employees but they started to look for customers who violate the norm of good behavior in the supermarket. About the fraud possibilities at the pay desk area he said that a reorganization of the area is planned so that all customers will stay in a longer row so they can be carefully observed by the cameras.
I concluded that nevertheless the weaknesses I noticed, besides the owner, the whole personnel of the supermarket are closely involved in the struggle against fraud and the implemented program for partnership has its fruitful impact over the whole business.
Works cited
Campbell, S., Hartcher, J., Internal Controls for Small Business, Web Accessed on July 6, 2006
