Six ways to reduce procurement fraud

• From company culture

to spotting warning signs,

all wise organisations are

arming themselves

against fraud in a range

of ways.

• Here are six:

1. e-procurement

• A new e-procurement system developed by a team of tech experts, business people and civil

servants to help combat widespread corruption in Ukraine's public procurement has started to

deliver impressive results.

• It was conservatively estimated that 20% of Ukraine's public expenditure had been lost

through corrupt practices, with reports on park benches bought for the price of a car - and

government departments spending $75 US dollars per cleaning mop.

1. e-procurement

• The new open source, transparent e-procurement system was launched last year and by

November 2016 had already saved the country $233 million US dollars, with more than 15,000

buyers and 47,000 commercial shoppers on board.

• Although transparency was the driving force behind its conception, with state information

about public contracts easily accessible online for anyone to see, other benefits have included

increased competition, less time and money spent on contracting processes and better

decision making for buyers.

2. A culture of ethics

• An ethical culture sets an expectation for all employees and contractors. By

recruiting the right people at all levels and ensuring that everyone, particularly

management, communicates with each other openly, honestly and fairly, it should

be evident that poor conduct is not accepted

….. a culture of ethics

• As well as living up to your expectations in behavioural terms, there should be

an explicit, written code of conduct stating how the organisation does business,

makes its decisions and deals with different situations.

3. Trusting instincts

• Buyers who don't take leave for

long periods of time, employees

having personal contact with

suppliers by text or out of hours,

generous gifts from suppliers or

people reluctant to have their

work audited at short notice.

These are all potential red flags.

• All team members should be

trained to look out for these signs

and be aware that it's their

responsibility to raise concerns in

confidence with an appropriate

senior colleague.

• People switch roles or move to different teams fairly often, so it's vital to remember to

remove their access rights to any systems that they no longer need to use, as well as

change passwords or pin codes on any shared programmes or devices.

4. Access denied

5. It takes two

• Although it's a well

recognised security

procedure to assign two

people to authorise and

make any changes to

supplier lists or supplier

details, such as bank

accounts, it is worth

checking often that this

process is being enforced.

6. Who’s on board?• Do you know who all your

contractors and sub-

contractors are?

• While you may well have

completed a thorough

checking process on your

main suppliers, it is not

unheard of for sub-

contractors to fall through the

net.

• A sub-contractor's behaviour

can impact on your

organisation heavily, so

knowing who they are and

vetting their businesses

before authorising their

involvement is key.

… Who’s on board?

• It could be a contractual

condition that your contractors

have to inform you of any

proposed sub-contractors, or

you could award a contract on

the basis that it is fully carried

out by the main contractor and

no sub-contractors will be

authorised without written

permission.

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