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HomeProcurementCrucial Strategies to Prevent Procurement Fraud

Crucial Strategies to Prevent Procurement Fraud

In today’s business world it is important for organizations to take steps towards procurement fraud prevention. Procurement fraud costs businesses millions of dollars every year, and the losses can likely be avoided if certain measures are taken to assist in procurement fraud prevention. The diagram below shows the procurement fraud that can be committed by employees, as well as by vendors.

Procurement Fraud
Diagram taken from https://pdfs.semanticscholar.org/27af/c9ec453ae0cf9e55f4032ff688cb70c2a61e.pdf

Procurement Fraud Life Cycle

Procurement fraud is often complex to investigate because it can occur at any stage of the procurement life cycle. Whether a business is small, medium or large, procurement fraud may occur. The fraud occurred most often during the invitation of quotes/bids stages, followed by the vendor selection and the payments process stage.

The procurement fraud life cycle may be illustrated as follows:

procurement fraud life cycle
Diagram taken from https://www.pwc.com/gx/en/psrc/pdf/pwc-fighting-fraud.pdf

Strategies to Consider

Most incidents of procurement fraud can be prevented or detected early if the organization possesses a complete understanding of:

• the procurement framework, which is the policies and procedures
• the risks involved in the procurement life cycle
• how controls and review mechanisms will reduce risks

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Doreen Chow Fong Meng, DPSM
Doreen Chow Fong Meng has more than 20years of experiences in the field of logistics, procurement, and finance, and specifically in the shipping and freight forwarding sectors. She is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). She completed the Diploma in Procurement and Supply Management (DPSM) on June 2019 at SIPMM Institute.

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