Wednesday, 24 July 2013

Is there an environment in which procurement fraud is more likely to develop?

If there are reductions in the frequency of exposing purchases to competition through longer-term arrangements, then it is more difficult to demonstrate ‘the price is right’ and suppliers also risk having more at stake from losing business.

If specific individuals have discrete longer-term responsibility for specific purchases in and are perceived to have unique know-how, then visibility of behaviour and critique of strategy is reduced.

If there is a streamlining of processes, which removes what were considered to be ‘non-value added’ checks and balances, then the likelihood of detection is reduced.

If there has been a switch to high-level strategic audit as opposed to random in-depth end-to-end process auditing then the likelihood of fraud being uncovered is reduced.

If there is a feeling of loyalty to the organisation not being reciprocated with loyalty to the individual, then it is more likely that employees will feel a sense of betrayal and anger. 

If there is job uncertainty, doubts about long-term security, a high probability of redundancy, worries about being able to get future employment, pay mortgages and family bills, it is likely that the temptation to engage in procurement fraud will increase.

If there is organisational complacency the procurement fraud only happens in other organisations, then there is a denial of reality.

Is there an environment in which procurement fraud is more likely to develop? Yes, right now.

First published as a guest blog on Procurement Insights, 10 July, 2013

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