85 per cent say 'do more to combat procurement fraud'

14 February 2011

15 February | Adam Leach

Purchasers are not doing enough to prevent fraud, the latest SM100 poll has found.

Some 85 per cent of respondents believe more could be done to halt the problem and think the time has come for the industry to ramp up the fight. 

Many believe the key to eradicating corruption from purchasing and tendering processes is strengthening and maintaining compliance procedures and tightening procurement departments’ grip on overall spending. 

Gary Moore, commercial and procurement governance manager for BAE Systems, believes a combination of, “traditional, no-frills competitive tender actions with objective selection criteria” and “a clearly defined and communicated delegation of authority to restrict those who can pledge company credit on behalf of an organisation” would drastically reduce opportunities for fraud.
“There is always more procurement can do, having a robust compliance regime and the support of senior management to enforce it would help,” suggested one buyer in the construction sector. She sees putting “more control of spend areas” into the hands of purchasing departments as a step in the right direction.
Procurement consultant Alex Strange said: “Organisations need to rethink their auditing principals and not conduct such activities three years after the purchase as many do, but review the strategy and do the audit much earlier, and possibly even before the contract is issued.”

Joining the 15 per cent of those who think buyers are doing enough is Andy Foulis, head of procurement and FM Services at Highlands and Islands Enterprise. He believes purchasing departments are already doing all they can to counteract fraud and the responsibility is with other departments where “routing everything through the purchasing department is discouraged because of the perceived cost in staff and resources”.
Foulis said such concern about staff and resources “is short-sighted given the potential cost to the organisation of fraud – not to mention the resultant reputational damage”.  

The poll also revealed that technology is considered to have a key role to play. Stephen Lowe of Beacon Consultancy said: “Spend control systems help enormously to control and give a clear audit trail.” These systems make committing fraud more difficult because “procurement professionals have the tools to have clear visibility of total company spend.”

See news focus: Time to get tough on fraud

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