Limiting Procurement Fraud And Corruption: Ideas From Deloitte

The risk of significant financial or reputational damage from procurement fraud may now be greater than ever with more countries stepping up enforcement of local anti-corruption laws and U.S. enforcement of the Foreign Corrupt Practices Act. Indeed, employees, suppliers, distributors, and competitors all have opportunities to commit procurement fraud — ranging from false invoicing, bribery and kickback schemes to inventory theft and substandard goods. 

Bill Pollard and Nick Robinson, partners in the Forensic & Dispute Services practice of Deloitte Financial Advisory Services, suggest in a paper out today that some of the red flags to look for include:
-          Inexperienced buyers dealing with overbearing suppliers
-          Excessive entertaining of procurement staff by suppliers
-          Deviations in communications between procurement staff and suppliers, such as calls or text messaging to mobile phones
 
Their paper is available at http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/FAS_ForensicCenter_us_fas-us_dfc/us_dfc/us_dfc_procurement_fraud_012010.pdf.