The nature of procurement activity ensures a high level of risk that fraud/corruption can occur.
Procurement fraud refers to violations in the process used to procure outsourced service providers and products. The process to identify, evaluate and appoint a service provider is particularly vulnerable to fraud and can be hard to detect.
Data quality can also cause problems. For example, failing to cleanse vendor data could result in duplicate vendors being listed within a system. This provides an avenue to change addresses, bank accounts and payment details. Poor controls governing vendor creation and management is a major procurement fraud risk.
Examples of the common types of procurement fraud are listed as follows:
- Fictitious vendors
- Kick backs
- Conflicts of Interest
- Improper project/contract variations
- Duplicate/inflated invoices by supplier
How we help clients
There are several ways we can assist our clients to prevent procurement fraud risk. In this respect we can:
- Develop and implement a Fraud and Corruption Control Framework
- Conduct Fraud Risk Assessments
- Provide Fraud Risk, Business Ethics and Compliance Training
- Implement Whistle-blower Policy and Procedures
- Educate contractors and suppliers in relation to your organisation’s code of conduct
- Establish a data mining detection program/s
- Implement processes for vendor and contractor background checks
- Review the controls governing, and interrogate the data within, your Supplier Masterfile to ensure the risk of fraudulent and corrupt activity is minimised.