What is the impact of fraud and corruption in your organization?
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Combating Procurement Risk and Fraud
Combating procurement fraud is vital due to the disastrous impacts’ procurement fraud brings. In Southeast Asia, procurement fraud costs US$140billion each year. Nearly all organisations will have been victims of procurement fraud and the consequences can be much greater than the value of the fraud. The most common types of fraud include kickbacks and bribes, bidding, variation abuse, billing, undisclosed interest, contract specifications and personal interest.
For private sector organisations, successfully tackling fraud can boost profits by several percentage points. For governments, tackling procurement fraud effectively can boost its reputation, thus, attracting more inward investment, improving public services and, with globalisation, making it a more competitive nation.
Procurement fraud has a few risks associated, but the critical areas include:
- Financial costs
- Reputation damage
- Public health and safety
Financial costs are an obvious impact that can be easily measured when it comes to fraud. This includes the loss of public funds through misallocations, higher expenses and lower quality of goods, services and works. Those paying the bribes seek to recover their money by inflating prices, billing for work not performed, failing to meet contract standards, reducing quality of work or using inferior materials, in case of public procurement of works. This results in exaggerated costs and a decrease in quality. A study by the OECD and the World Bank shows that corruption in the infrastructure and extractives sectors lead to misallocation of public funds and substandard and insufficient services.
Reputation damage can be your greatest cost – despite the size of the fraud. Organizations in the public light must be seen to be honest to their stakeholders and they must have trust in organization’s ability to manage public funds.
Public health and safety risks occur when services or goods delivered by contractors do not meet requirements or follow policy. From poor construction, sub-par goods or services not being delivered, there are several ways citizens’ safety and health can be jeopardized.
However, successfully combatting risk and fraud brings about several benefits such as cash savings through better procurement, cash savings through combating procurement fraud, better contracting outcomes, improved reputation and competitiveness.
Procurement Certification in Combatting Risk and Fraud is a 3-day training course held from 25-27 February 2019 (Kuala Lumpur). Delegates attending this workshop will understand how to reduce the risk and cost of fraud to their organisation and how to secure better value from better procurement and better contracting outcomes. This course is also certified by The International Association for Contract & Commercial Management (IACCM), where delegates will be able to achieve world-class standards in their trading relationships.
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