A large company which manufactures pharmaceutical products has recently opened a chain of chemists’ shops across the country. This was to enable the company to sell its own brands of proprietary medicines to the public and also to diversify into the retailing industry.

Other manufacturers’ products are also sold through the shops.

The board of the company is concerned that gross margins are not as good as had been budgeted. All purchasing is done centrally and the cost of goods sold is roughly in line with expectations. It has been suggested that staff fraud is having an effect on recorded income, particularly as the stores have been designed to deter shoplifters.

(a) Suggest why it may be difficult to prevent staff fraud in a major retail organisation.

(b) Suggest some of the controls which could be implemented within the stores to prevent fraud.