This article is written by Managing Consultant, Bryan Schriiffer.
Procurement Fraud is topic that is not often discussed, but it is a risk to all organisations large or small. Is it happening to you and your business today?
Procurement fraud is one of the leading causes of financial loss in organisations in Australia and New Zealand today.
It is happening across all sectors of business, public and private organisations and central and local government. The focus for organisations today is going to market to obtain goods and services in the most cost-effective method. Often organisations neglect to put in place the business rules and guidelines to control the procurement process and its associated risks.
Is your business vulnerable to the risk of fraud? If you do not have comprehensive systems and processes in place to monitor procurement transactions then the answer is Yes!
The leading cause of fraud in organisations is from employees. It often starts as a one-off opportunity, that can quickly develop into a systematic and large-scale fraud.
Fraud in organisations is growing, the 2016 PWC Global Economic Crime Survey identified that 52% of Australian respondents experienced economic crime compared to the global rate of 36%. Of the Australian respondents to the survey, 30% experienced more than 100 incidents of economic crime compared to 9% of global respondents.
These figures represent only those organisations who responded to the survey. History tells us that a significant amount of procurement fraud goes unreported as organisations often do not report procurement fraud due to a variety of factors, including:
- Reputational risk to the organisation
- Economic factors that can impact on future work
- Legal ramifications of the fraud going to court
- Loss of human capital to the organisation
- Financial cost to prosecute or recover the debt
- Management’s time to investigate the fraud
- The size of the financial loss becoming pubic
- Impact on customer or shareholder confidence
There is a wide range of the types of procurement fraud perpetrated in organisations, these include but are not limited to:
- Undisclosed conflicts of interests
- False credits
- Bribes
- False invoices
- Fictitious suppliers or contractors
- Skimming
- Inflated or duplicate Invoices
- Rigged or collusive bidding
- Inferior products supplied
- Manipulation of funds and accounts
- Kickbacks
All organisations should have strong controls and oversight in place around the procurement function including business rules and guidelines. Often procurement fraud incidents go undetected for extended periods of time before being discovered.
Rowe Advisory is one of the leading consulting businesses in Australia. We are strategically placed to manage and facilitate a risk review and implement proven procurement systems and processes to limit your organisations exposure to procurement fraud.
Our team of industry experienced consultants are here to help. Contact us today for a no obligation confidential discussion. Lastly and most importantly, we guarantee our work.
If you believe that your organisation is facing any potential procurement fraud in your day-to-day business operations contact Rowe Advisory to discuss how we can help your organization.
Contact Rowe Advisory on (07) 3210 1104 or email:
Bryan Schriiffer at bryan@roweadvisory.com.au
Jody Rowe at jody@roweadvisory.com.au