• Ian Makgill 28/10/2016 10:56AM

    In Procure to Pay

    What do you do to detect procurement fraud in your organisation?

    What sorts of checks and analysis do you do to prevent fraud and how often do you do them?

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  • Answers (9)

  • Andrew Wallace MCIPS

    14/11/2016 10:45AM

    Aside from all the useful advice mentioned above you can also use a statistical tool called Bentham's law (see https://en.wikipedia.org/wiki/Benford%27s_law), it can detect unusual spend patterns and has been used as evidence in fraud cases in the US. it pretty simple to do and looks at the distribution of the 1st digit of a cost, the theory being that there will be more invoices beginning with the number 1 (£10, £100, £1,000, £10,00) than there will with 9 ( £90, £900, £9,000), where fraud occurs perpetrators subconsciously disrupt the normal pattern of distribution which can commonly be seen as a anomaly in the distribution curve

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  • Ian Makgill

    18/11/2016 02:07PM

  • Richard Hughes MCIPS

    31/10/2016 08:48AM

    Basic financial prevention checks as follows:

    1. Review your financial controls at appropriate intervals and do so critically, keeping them up to date.
    2. Segregate duties – do not allow only one or two people to be in charge of all aspects of your financial controls.
    3. Make sure all the separate parts of the financial records agree with each other. Reconciling bank statements with invoices, receipts, purchase and payment authorisations can often help to identify fraud at an early stage.
    4. Keep a register of valuable fixed assets and inspect the them periodically.
    5. Ensure that electronic or online banking arrangements are secure and are protected with dual-level authorisation.
    6. When recruiting staff – especially those who handle the finances - make appropriate background checks and take up references.

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  • Ian Makgill

    18/11/2016 02:06PM

  • Ian Makgill

    14/11/2016 10:49AM

    We've written some algorithms (including Benford's law) that monitor procurements in order to identify high risk activities in procurements, specifically for cartels. Is anyone else using this sort of approach, where they can monitor every procurement?

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  • Grahame Ball MSc FCIPS

    10/11/2016 03:20PM

    I think that clear segregation of duties with a strong delegated authorities matrix and good MI should be enough to get you started...

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  • moh min

    08/11/2016 11:07AM

    Hi Richard

    within a procurement context, the following are indications, that might appear on the cheater

    - He does not take leaves,
    - He does not delegate responsibility
    - Alway he is worry, and isolated.
    - He speedup some supplier payments
    - He have strange and not standard procurement behaviors

    Also, the procurement corruption, is not easy to detect, and may take long time of investigation,
    finally, please add to your 6 points of your basic financial prevention

    - Rotate staff each two years, for different supply chain roles

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  • Andrew Wallace MCIPS

    07/11/2016 10:43AM

    Aside form putting controls in place in the first instance, Benford's law can be used to detect unusual spending patterns (see https://en.wikipedia.org/wiki/Benford%27s_law)

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  • Amogh raj

    02/11/2016 02:06PM

    By implementing Mitigating controls process - quarterly basis - If you want more information i will help you. We are running this project from 3 years. drop me your contact details to [email protected]

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    Milton Filho for me as well, please! [email protected] Thank you!

    07/11/2016 04:12PM

    Ahmad Khalid Ahmadzai A copy to [email protected] will be appreciated.

    08/11/2016 09:22AM

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