Investigating and Assessing Risk Levels and Current Controls #5

Written by Martin Phillips

The white paper “Principles of Procurement Fraud Prevention” outlines and explains vital concepts regarding preventing procurement fraud. These principles are about creating an anti-fraud culture, establishing a due diligence culture, defending against social engineering, leveraging information technology to prevent fraud, and investigating and assessing risk levels and current controls.

This blog is the final entry in a five-part series explaining each concept outlined in the white paper. Consequently, this blog will explore investigating and assessing both risk levels and current controls. Prior knowledge of the previous entries is not necessary to understand what is explained here, but it is strongly recommended as successful procurement fraud prevention uses all of the principles.

The Need For Constant Assessment

There are many controls in place for fraud identification and prevention. In many situations, organisations use a multi-layer system to make a daily check of all the purchasing activity, accounts payable and procurement.

It is a robust method that helps prevent the bulk of fraudulent activity because it uses many prevention and detection methods. This method is proactive, using tools to find issues before they become problems and then dealing with them. However, like any preventative approach, it requires a regular assessment to guarantee working effectiveness.

How to Assess and Continually Investigate Fraud

There are multiple methods we can employ for both assessing current control methods and investigating fraud.

Using proactive conflict-of-interest checks allows us to avoid potential conflicts of interest and conduct initial and ongoing checks on staff members who occupy positions where they are at the highest risk of corruption, bribery, or a conflict of interest. This can be done in conjunction with spend analysis, a severely overlooked area for a business. Your spend analysis typically takes a lower priority than some of the other issues in the company, but this can work to your detriment because, without a clear understanding of spending, many businesses can’t identify fraudulent activity.

Finally, conducting a fraud procurement audit is an excellent way to identify issues. Tenders are analysed at the forensic level to see if a genuine competitive process occurred. There are plenty of other points to be considered during a proper forensic procurement audit, and this can help to identify areas where an issue might take place. Things like analysing communications and paying attention to challenges involved in procurement are recommended.

Final Thoughts

So, when it comes to investigating fraud and assessing current risks, this is an ongoing part of any fraud prevention software. Complacency is deadly for any business because a criminal will exploit your faith in a system to exploit potential weaknesses.

This blog concludes our five-piece series on procurement fraud prevention. Each of the principles can be taken and adopted by a business to minimise the risk of procurement fraud. Your system for fraud prevention should constantly evolve and change with new technologies and threats. Regular audits, checks and assessments can help a business to remain on top of fraud prevention for years to come.

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