Early Warning - All About Procurement Fraud - Part 6

EARLY WARNING - All About Procurement Fraud – Part 6

By Nikki Viljoen – Viljoen Consulting.

Last time we looked at some of the different types of issues that need to be looked at around procurement.

Today we will have a look at some more.

As we said one of the ways to limit procurement fraud is to ensure that you have a proper procurement policy in place and that it is adhered to and checked on a regular basis. We looked at the Needs Analysis, Timing and Suppliers. Then we looked at Supplier Communication and Negotiation and then Supplier Liaison, Logistics Management and Tender Notification. Other issues that need to be taken into account when implementing the procurement process are (but not limited to):

In this the final issue on procurement fraud let’s look at some of the practical processes that can be included  (but not limited to) in your procedure in order to limit fraud.

- Make sure that the procedure is that there has to be a minimum of 3 quotes.
- Make sure that all the suppliers, who have submitted quotes, have contactable references and do the reference check.
- The person, in your company, who submits the quotes, should not be the person who authorizes the use of the supplier (unless of course that is you – the business owner).
- The person, in your company, who orders the products/supplies/service, should not be the person who authorizes the purchase (again, unless of course that is you – the business owner).
- The person, in your company, who ‘pays’ the supplier should not be the person who authorizes the payment (unless of course that person is you – the business owner).
- There should be a valid ‘gift’ policy in place to govern/prevent your employees from receiving ‘gifts’ as ‘kick-backs’ from suppliers and/or service providers for ensuring that they become creditors.
- The most expensive quote does not always translate into the best value for money – make sure that the research is properly conducted to ensure that you get the best value for your money.
- Make sure that you have a proper Service Level Agreement in place, with realistic consequences for non-delivery and/or to ensure that you are properly covered in terms of compliance.

Finally, use common sense – if the deal is ‘too good to be true’, it usually means exactly that.  Always be alert for charlatans and scammers as they are always on the look-out for gullible business owners.

Nikki is an Internal Auditor and Business Administration Specialist who can be contacted on 083 702 8849 or nikki@viljoenconsulting.co.za or http://www.viljoenconsulting.co.za