Preventing procurement fraud
Alan Bryce, Business Fraud Campaign Manager, Fraud Advisory Panel
All organisations need to buy in goods and services. Regardless of whether you rely on a handful of local traders or a long international supply chain, there is always the risk of fraud. For all charities – both large and small – spotting and stopping fraud in the procurement process is, therefore, important.
In my experience – both as the former head of counter fraud and cybercrime at the Charity Commission for England and Wales, and as the business fraud campaign manager at the anti-fraud charity, Fraud Advisory Panel – fraud has the potential, if left unchecked, to ruin an organisation – both reputationally and financially.
If the contract management procedures in your charity are not up to scratch, procurement fraud can easily go undetected. And this can happen anywhere in the procurement lifecycle from the planning and assessing stage right through to contract management.
Some common examples to look out for include fictitious suppliers, collusion (both between staff and suppliers and between suppliers), kickbacks or bribes, inflated invoices, product substitution, and the misappropriation of assets. These are the types of fraud that small charities need to be aware of and protect themselves against.
Ask yourself the following question: do the staff, trustees or volunteers at my charity know the signs of procurement fraud? If they don’t, they should. For example, would your staff sound the alarm if orders to a particular supplier regularly fell just below the financial threshold for additional scrutiny?
If procurement fraud is a particular concern for your charity, download and use our free guide to ‘Buying goods and services safely” and watch our ‘three top tips’ video. The guidance includes a simple checklist of dos and don’ts to help keep fraud out of your charity, which includes:
- not allowing any one person to make all the procurement decisions or perform all the payment activities in your charity,
- regular monitoring spending with suppliers and following up on anything out of the ordinary, and
- conducting appropriate due diligence checks on suppliers.
Procurement fraud is just one of four fraud themes we’re covering as part of our year-long Love Business Hate Fraud campaign which provides simple practical information for small organisations, including charities. For more information, visit https://lovebusiness-hatefraud.org.uk/