Best of 2023: CPO Rising Listicle — Reduce Procurement Fraud in Five Steps - CPO RISING - THE SITE FOR CHIEF PROCUREMENT OFFICERS & LEADERS IN SUPPLY MANAGEMENT

Editor’s Note: Over the next few weeks on CPO Rising, we’re publishing some “best of” 2023 articles as we reflect on the year and prepare for the new year ahead.

Fridays (in 2023) means that it’s time for another CPO Rising Listicle. Each list will include a variety of procurement tips, trends, insights, research, lists, strategies, and/or recommendations designed to help procurement teams improve operations. We’ll also include a summary graphic for you to share with your team.

With the huge spike in fraud activity during the pandemic, procurement fraud prevention is something that needs to be part of every Chief Procurement Officer’s strategic plan. Eliminating procurement fraud involves implementing a combination of preventative measures and ongoing monitoring to detect and address any fraudulent activity. Here are some ideas on what you can do to minimize it.

Five Steps to Help Reduce Procurement Fraud

Develop and implement strong procurement policies and procedures. Establishing clear policies and procedures that outline the process for purchasing goods and services can help to reduce the risk of fraud. This may include setting limits on the amount that can be spent without prior approval, establishing a system for verifying the legitimacy of vendors, and requiring documentation to support the purchase of goods or services.
Implement controls to prevent fraud. There are several controls that can be put in place to help prevent procurement fraud, including segregation of duties, dual authorization, and independent reviews. For example, separating the roles of purchasing and payment can help to prevent one individual from both requesting and approving payments to a fraudulent vendor.
Train employees on procurement fraud risks. Educating employees about the risks of procurement fraud and how to recognize and report it can help to prevent fraudulent activity from occurring. This may include providing training on the signs of fraud, such as sudden changes in vendor behavior or the submission of false invoices.
Monitor procurement activity. Ongoing monitoring of procurement activity can help to detect any fraudulent activity that may occur. This may involve regularly reviewing purchasing records and invoices, and performing audits to verify the legitimacy of vendors and the goods or services being purchased.
Investigate and address any instances of fraud. If procurement fraud is detected, it’s important to take swift action to investigate and address the issue. This may involve working with law enforcement or other authorities, as well as taking disciplinary action against any individuals involved in the fraud.