auditing it procurement fraud schemes - philippines chapter
TRANSCRIPT
AUDITING IT PROCUREMENT FRAUD
SCHEMES
MARIO B. DEMARILLAS
PRESIDENT – ISACA MANILA CHAPTER
IT SPENDING STATISTICS
PHILIPPINES IT SPENDING
• 2015 – $7.30B
• 2016 - $7.88B
• 2017 - $8.52B
• 2018 - $9.20B
• 2019 - $9.93B
• 2020 – $10.73B
Php 6.8B
DEBUNKING MYTHS AND BELIEFS
MYTHS & BELIEFS
MYTHS & BELIEFS
OPPOSING FORCES
FRAUDWILLINGNESS TO
UNCOVERABILITY TO CONCEAL
COMMON FRAUD SCHEMES IN THE
PROCUREMENT PROCESS
Pre-Solicitation Phase
Pre-solicitation phase
Need recognition Bid tailoring
Narrow specifications
Broad specifications
Vague specification
Bid splitting Unjustified method of procurement
Change order abuse
Solicitation Phase
Solicitation phase
Bid manipulation Leaking bid dataCollusion among
contractors
Complementary bids / Bid rotation / Bid
suppression / Market division
Defective pricing schemes
Inflating labour costs
Inflating material costs
Bid Award and Evaluation Phase
Bid evaluation and award phase
Bid manipulation Leaking bid data
Post-Award & Administration Phase
Post-award and administration phase
Non-conforming
goods/services
Change order abuse
Cost mischarging
Accounting mischarges Material mischarge Labor mischarges
RISKY BUSINESS OF FRAUD
• Monitor – 24 inch LCD, 1080p
• Sixth Intel Generation Core
• Graphics –Nvidia GTX 950
• Microsoft Office
• RAM – 16GB
• Hard Drive – 256 GB
• Optical Mouse and Keyboard
Miss Universe – Q&A
• Monitor – 24 inch LCD, 1080p
• Sixth Intel Generation Core I5
• Graphics –Nvidia GTX 950
• Microsoft Office 2016
• RAM – 16GB
• Operating System – Windows 10
• Hard Drive – 256 GB SSD
• Optical Mouse and Keyboard
SwitchBoarding
• Purchased 200 laptops
• Purchase Price – less 5% discount
• 30 days delivery lead time
• 3 years warranty
• Same supplier for 10 years
Harry Potter’s Invisibility Cloak
• Purchase 150 laptops – P480K
• Delivery – 30 days
• Vendor – Company X
• Purchase 130 laptops – P480K
• Delivery – 5 days
• Vendor – Company X
Siamese Twins
Snail Mail Internet
Bandwidth
Traffic
Employee
License to Kill
USER CALs
DEVICE CALs
MS SQL VERSION???
Substituted Filing
• Project Manager
• System/Business Analyst
• Team Leader
• Programmer
• Designer
• Monitor – 24 inch LCD, 1080p
• Sixth Intel Generation Core I5 (I7)
• Graphics –Nvidia GTX 950
• Windows 7 Ultimate (Win 8)
• Microsoft Office
• RAM – 16GB (32GB)
• Hard Drive SATA – 256 GB (SSD)
• Optical Mouse and Keyboard
Change is Constant
Regulatory Compliance
Enterprise and
Operational Risk
Audit Management
IT & Security Risk
ERM is key to Sustainability
• Audit
Management
• Enterprise and
Operational Risk
• Regulatory
Compliance
• IT & Security Risk
• Company 1 (P 50M)
• Company 2 (P 55M)
• Company 3 (P 60M)
• Company 4 (P 52M)
• Company 5 (P 63M)
FFTW
Technical Specs Revised Price
P 50M
P 55M
P 49M
P 48M
P 68M
SEEING THROUGH THE LENS
SELF COLLEAGUES
CULTUREPROCESS
AWARENESS
DETERRENCE IS KEY
LEARN TO STUDY PATTERNS
SUBSTANTIATE MORE
QUESTIONS???