Procurement Fraud and Corruption
A multi-faceted challenge
Procurement is one of the key functions in the business operations of any organisation. Organisations, whether big or small are prone to the risk of fraud and corruption in their procurement cycle. The reputational and financial fallout from such cases can be disastrous. With growing number of companies using suppliers based in low cost regions , and increased financial pressure brought about by the current volatile economic environment, the instances of fraud and corruption in the procurement cycle are increasing. Instances of fraud and corruption in the procurement cycle are difficult to detect, prove or prosecute.
They are often dealt with internally, and the implicated employees are allowed to “resign” with their reputations intact, thereby increasing the likelihood of there being unprosecuted fraudsters amongst a company’s experienced hires. While many of the factors that influence procurement fraud and corruption are generally known, we take a pragmatic view by identifying the circumstances, typical to a procurement fraud. We then drill it down to the procurement lifecycle and introduce you to the most prominent scenarios of frauds. Lastly, we dwell on how fraud mitigation can be ingrained into a company’s operating culture and some of the key elements to a structured approach in investigating the incidents of frauds.