| Abstract: | This paper is aimed at management, accountants, auditors and loss prevention officers responsible for assuring the existence and effectiveness of internal controls to minimise fraud in retail business environments. Retail is defined to include the wide array of retailers serving consumers across shopping malls and on the high street as well as organisations that have retail operations supporting their main non-retail business activities, such as book stores in universities and souvenir shops in museums. Whether cash or cashless, retail point-of-sale (POS) transactions present multiple fraud opportunities despite the existence of internal controls. Based on experiential observations at clients in the UK, US and Australia, approximately 3% of staff entrusted to process customer payments at the POS create inventive ways to steal cash, credit card data and stock during routine POS till operation. Anonymised fraud schemes from real client situations are provided in this short paper. To help combat these kinds of fraud, POS systems have inbuilt transaction summaries and audit trails useful to management, loss prevention officers and auditors. But these inbuilt system controls are insufficient on their own and therefore must be augmented by human behavioural controls such as policies, management procedures and CCTV. This paper summarises how an array of controls can work together to reduce, if not entirely eliminate, potential fraud scenarios by POS operators. |
