It’s unfortunate to see recent press articles where cases of internal fraud and corruption have reared their ugly heads, but in current climates it is an issue that organisation’s have to keep under close review. 

Recent press coverage includes Dragon Oil who have announced an investigation into “possible irregularities” within its procurement procedures, while Police are also investigating a Scottish IT company following allegations of fraud and the roll-out of an eSourcing platform for the NHS.  In the US, online company Best Buy has suffered from the collaboration of one its suppliers and an ‘Insider’ within their purchasing team, to the tune of $31 million.  

No organisation wants to think that their employees or suppliers would consider any kind of fraudulent activity, but in difficult economic times, it can become an increasing occurrence. 

Yet with the right systems and processes, measures can easily be put in place to prevent fraud. In the instance of Best Buy, the lowest winning bid price from a reverse eauction of electronic parts did not correctly pass through to the contract management, requisitioning or invoicing process. As a result Best Buy were paying $571 for a part instead of $42. 

Any best-in-class eProcurement system should include controls that close these loopholes and remove discrepancies in value or quantity. Not only can you prevent maverick, unapproved spend, but fraudulent purchasing can be eradicated.