Fraud Prevention and Detection

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8

Procurement Fraud

Methods and Red Flags

INTRODUCTION

This chapter introduces the reader to how procurement fraud is perpe-

trated and its attendant Red Flags.

PROCUREMENT FRAUD AND ITS RED FLAGS

Red Flags that indicate procurement fraud may exist at any stage of

the contracting process. Whether at the budget, award, or performance

stage, Red Flags that indicate and establish fraudulent activity may have

criminal, civil, contractual, and/ or administrative ramications on every-

one involved.

Company directors will most likely rely on management and audi-

tors to detect the Red Flags. However, by understanding the nature of the

contracting process as well as being able to identify when managers and

employees may be a party to a procurement frau ...