How a Procurement Fraud may be detected before it hurts?

Verify Vendors.

Whenever you begin a new business relationship, verify the existence and the validity of the vendor. A simple PO Box address is often used to create phantom vendors, so the existence of an address is not verification. Require a W-9 for all vendors and establish an approved vendor list to guide your invoicing process.

Review Your Financial Reports.

Quite simply, you can’t see the warning signs if you don’t look. A regular review of your financials will help you spot duplicate payments, vendors who appear to win a disproportionate share of contracts, and unreasonable prices.

Require Back-Up.

Employees are often able to create phantom vendors and false invoices because no supporting documentation is required. Establish a policy that mandates appropriate back-up for invoices and periodically review vendor files to ensure the back-up documentation is included.

Strong control system can help you. Business ethics is very important, but this is a softer side of the business. Strong vendor management and fair competition among vendors can also give a positive result.