05 September 2002 | Liam O'Brien
Separation of purchasing duties is a vital tool for stemming fraud, according to a new CIPS position statement produced in the wake of concern about corporate corruption and scandals including the collapse of Enron.
The CIPS document calls for a minimum of two employees to be responsible for the three key purchasing activities: identifying the need for a service or product, buying it and payment.
One person alone, it says, should never be responsible for more than one of these roles.
Melinda Johnson, head of policy and representation at CIPS, who compiled the report, said: "It is a fundamental of good purchasing practice.
"You don't ever want to be in a position where anybody can accuse you of doing something that you shouldn't.
"Separation protects the buyer as much as anything else. We are not suggesting that buyers are fraudulent, but people can accuse you of things."
CIPS acknowledges the considerable potential for fraudulent activity in procurement, ranging from taking a percentage payment on a large contract to siphoning a few pounds from each call-off order, but does not take a view on how common it is.
It calls on purchasers to be more proactive and take responsibility for their organisation's spending and implement procedures and controls.
The position paper - the result of canvassing the views of more than 200 practitioners - advises buyers to report wayward buying practices to senior management and be constantly on the alert for possible fraud.
Alan Davey, group finance director for procurement consultancy Aria Group, said there was a danger in concentrating purely on purchasing when cracking down on potential corporate fraud.
"When you look at the likes of Enron and WorldCom, you are talking about fraud on a grand scale," he said.
"In these cases, it was more to do with the financial function than procurement. You have to look at the whole rather than the specific with this sort of thing."
• Corruption is rampant in Indonesia, Kenya, Angola, Madagascar, Paraguay, Nigeria and Bangladesh, which all come last in a new survey of 102 countries from anti-corruption campaigners Transparency International.
Finland tops the index for probity and is followed by Denmark, New Zealand, Iceland, Singapore and Sweden. The UK is the second-cleanest of the G7 developed nations in the probe at number 10 with a score of 8.7 out of 10.
The only G7 nation to be less corrupt is Canada at number 7, with a score of 9.
• All of the CIPS documents and policy statements are available at www.cips.org/about/policies.asp