Procurement Fraud and Corruption - WhatYou Need to Know

Of all the areas within a company that are susceptible to fraud or corruption, the supply chain isone of the most prominent. Whether it’s questionable rebates or potentially troublesomerelationships with vendors, there’s no way to eliminate the possibility of these issues with 100%certainty. Companies that take a proactive stance on procurement fraud and corruption will be inthe best position to deal with it.

Understanding the Dynamics of Fraud and Corruption

Although these words have very loaded meanings and either action can be very complex in theway that it’s carried out, the dynamics at the core of these issues are often surprisinglystraightforward. In many cases, pressure, opportunity and rationalism are the only three factorsthat need to be present in a business environment for fraud to occur.

The easiest way to fully understand this issue is to look at a realistic example. Given that manycompanies are still facing various financial challenges, individuals may feel pressure to either

deliver specific results for the organization or to secure their own financial well-being. Unlessthe right controls are already in place, it’s often surprisingly easy for people to carry out actionsrelated to fraud or corruption.

And if someone is facing what they view as overwhelming or otherwise pressing circumstances,it’s very likely that it will be quite easy for them to rationalize their decisions. But just becausesomeone feels that they have a justifiable reason for taking a specific action doesn’t mean that itwill turn out okay for the company.

Reactions to Procurement Fraud and Corruption

In the event that fraud or corruption does occur within an organization, they have to decide howthey’re going to respond. Unfortunately, many companies take a less than ideal approach upondiscovering this type of problem. Even though this type of issue can cause major damage for acompany’s reputation, many companies shield the responsible parties from any significantconsequences. The big problem with that approach is it sends the wrong signal to the rest of thecompany.

Preventing Major Issues Related to Purchasing

While figuring out the best way to deal with the discovery of fraud or corruption can be a trickyissue, minimizing this risk doesn’t have to be complicated. Instead, there’s a fairlystraightforward way to put the necessary controls in place to curb this kind of activity.

With PURCHASING SOFTWARE, things like poor record keeping that create an easyopportunity for fraud are eliminated. Because PO SOFTWARE centralizes all purchasingactivity and offers controls for things like budget thresholds, it provides safeguards that simplyaren’t possible with a manual purchasing system.

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