Identifying fraud through mass balancing – is it possible? A study of a mixed-method approach in the Norwegian cod fishery

Summary

In this report, we have used a mixed-method approach comprised of a mass balancing combined with a mapping of the regulatory framework and an in-depth case study to highlight sources of discrepancies in the supply chain in the Norwegian whitefish industry. Mass balancing reveals a discrepancy between input and output of cod. Mass balancing is performed using publicly available data on landings, consumption and trade. In an attempt to explain the discrepancy, different sources of errors are identified by analysing the regulatory framework and the context. Three sources of main errors are identified and discussed: errors in source data, errors in the method of mass balancing (Material Flow Analysis) and fraud. There are two information gaps in the public records in Norway: a lack of specific product registration in the production phase and actual figures on inland consumption which are provided as estimation only. Furthermore, conversion factors are used to generate a common denominator when balancing numbers for both landings and export. These factors stand out as important sources of error that should be investigated in more detail. Warehousing also appears to influence this discrepancy, especially in periods with market challenges. The approach is useful for identifying discrepancies and anomalies but does not detect fraud as such. It should be used as a supplement to other methods rather than as a stand-alone tool.