Have you thought about whether your company needs to improve its policies to avoid fraud in the purchasing department? Or do you suspect members of your staff or suppliers who are having illegal practices? Hopefully not. And to help you, we want to give you these tips to prevent and detect corrupt and fraudulent activities in time:
What is a fraud in the purchasing department?
Based on the bad experiences that organizations and companies of all kinds have had, the purchasing department is an area that is characterized by its high levels of risk, since it has the authority to have financial resources and carry out transactions in the company name.
In this sense, a fraud in the purchasing department, also known as procurement fraud. It is a labor practice in which people belonging to this area enrich themselves personally through an improper performance of their functions and responsibilities with the improper use of economic resources of a company, either depriving it of receiving them or extracting them illegally.
That is why one of the most important goals raised by senior executives of a company is to avoid fraud in the purchasing department. It is mainly because this represents a strong risk to capital and business assets and a crime committed by the people who are part of this department, against the legal policies and management of a company’s resources.
When talking about fraud and irregularities in the purchasing area, it is important to detail the following situations that tend to be frequent within this practice:
The first is associated with corruption activities where, for example, the supplier returns a percentage of the total value of the purchase order (usually in cash) due to budget errors or poor provision of services to the entity’s personnel and this return is not Leave in writing or deposit to the company’s account, but it is left to the people who work in the area.
The second fraud situation occurs when there is an alteration or falsification of supporting documents or information with a view to indirectly profiting a group of people belonging to this area. If you want to avoid fraud in your company, you should get in touch with Parker Russell International. It is a global firm of chartered accountants that offers auditing, tax, and advisory services. Founded in 2003 by Jason Parker, the company has grown on to become one of the top advisory and auditing firms. A routine audit of your purchasing department with them will help identify instances of fraud in your company.