Food crime unit and robust, international, due diligence needed

Food crime unit and robust, international, due di...

In response to the horse meat scandal report KPMG has warned organisations risk a repeat of the crisis if they do not tackle weak links.

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Responding to the publication, today, of a Government-commissioned report into the horse meat scandal last year, Annette Barker, Forensic Director at KPMG, warned that unless organisations tackle weak links in their supply chain, they risk exposure to fraud and a repeat of the crisis.

She says: “Today’s report represents a significant step forward in the battle to ensure the UK’s food supply is safe from harm.  By setting out the actions that can be taken to improve the integrity of food supply networks, it offers a blueprint to ensure food is protected from field to fork.”

Produced by Professor Chris Elliott of the Institute for Global Food Security at Queen's University Belfast, the report acknowledged that the UK has high standards of food safety, but it suggested that the scandal clearly showed criminal activity in the global food chain.

Professor Elliott’s report highlights the importance of high quality, robust audits, involving the use of forensic accountants to gain assurance over the veracity of the supply chain.

Annette adds: “The horsemeat scandal served as a stark reminder of the consequences of supply chain failure. Whilst the food industry has clearly made progress there is still much to be done to ensure robust controls are in place.  How far, for example, have organisations gone to scrutinise their suppliers and brokers on an ongoing basis? 

“The pressure to keep a steady supply of food at reasonable prices remains high which leads to suppliers looking for ways to keep costs competitive.  Some food supply chains have become increasingly complex with agreements spanning the globe. Cost pressures and increased complexity naturally bring an increased risk of fraud. That is why the report is right to call for more stringent auditing of all aspects of the UK’s food supply chain. The importance of robust counterparty due diligence for organisations in today’s market cannot be overstated meaning that stark questions should be asked as to how far down the chain those procedures should go.” 

Professor Elliott’s report also recommends that a specialist Food Crime Unit is created, with the expertise to undertake investigations into serious food fraud.  Annette concludes:  “Our own analysis of fraud across the UK shows that supply chain fraud has grown in the past 12 months. Not only is this bad for business; it has a real human cost.  As fraudsters become more sophisticated an increased focus on fraud detection and prevention is essential to ensure consumer safety and the integrity of our food supply chains. A new Food Crime Unit must establish effective links with industry and enforcement agencies, working closely with third parties in order to ensure it can be effective in meeting its objectives to deter professional criminals from targeting the food industry.”


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About KPMG

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff.  The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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