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In this guest post, Procurement Leaders invites risk specialist Stephen Ashcroft to look at the state of procurement fraud and where he thinks functions could be managing it better.
There is an excellent report, the Report to the Nations on occupational fraud and abuse, published in 2012 by the Association of Certified Fraud Examiners. It is directly relevant to procurement specialists and those charged with auditing procurement activities; particularly relevant to procurement is the corruption scheme category in which an employee misuses his or her influence in a business transaction in a way that violates his or her duty to the employer in order to gain a direct or indirect benefit (e.g., schemes involving bribery or conflicts of interest).
The report identifies 16 behavioural red flags of perpetrators. These are, by ranking:
Procurement is a ripe area for an opportunity to engage in occupational fraud. Brian Farrington Limited has produced a range of indicators that may indicate fraud. These include:
The head of procurement would be advised to explore fraud risks with these 7 'starter' questions:
What else would you add?