Highly competitive environments, global supply chain shortages, economic recessions, financial distress, and geopolitical instability can be major contributors to the rise of procurement and vendor fraud. When companies are dealing with increased pressure to manage supply chain disruptions, lack of inventory, or increased prices for materials and components, they should be ready to manage a number of procurement fraud risks. Even though the list of procurement fraud schemes is lengthy, we focus on a few examples of the most prevalent: change order abuse, conflicts of interest, bribes and kickbacks, bid rigging, fictitious vendors, sole sourcing, and split purchases.
Based on our practical experience conducting financial investigations, knowledge of compliance processes and procedures, and our expertise on data analytics techniques, we cover the following:
- A description of each of the top five procurement fraud schemes
- Examples of data analytics techniques to identify red flags associated with procurement fraud schemes
- Examples of actions you can take to mitigate the associated risks
- Tools, such as forensic data analytics procedures, that companies can use to identify the early signs of the aforementioned procurement fraud schemes
Why It Matters
In turbulent economic times or in highly competitive environments, companies should confirm that their corporate compliance procedures are updated to identify and to mitigate the potential risks associated with upticks in fraudulent procurement and vendor activity.
Managing Director, Forensics and Litigation Services
Victor Padilla, CFE, has more than 15 years of experience in anti-corruption efforts, forensic accounting,…
Senior Manager, Forensics and Litigation Services
Sasha Gartman, CFE, CAMS, has more than 15 years of experience in public accounting, compliance and financial services. Before…
Executive Resource Center
Top Procurement Fraud Schemes and Actions Companies Can Take to Identify and Mitigate the Associated Risks, Part 2 of 2
In the second of this two-part series, we list ways to analyze and monitor various types of procurement fraud and…