Procurement fraud can not only reduce a firm’s profits but also destroy its ability to invest. In this case, the effectiveness of a procurement service would determine the success or failure of either a private venture or an entire national economy ( Piper, 2017) . Despite there being legal regulations that govern procurement processes, businesses are still at a greater risk of fraud due to their lack of understanding and implementation of anti-fraud controls.
Article Summary
According to Dhurandhar, Ettl, Graves and Ravi (2015), ideal business practices that involve the participation of customers and vendors are subject to fraud or an intentional deception by the involved parties. As a result, there would be an illegal and unfair gain to the party perpetrating the fraud. Relative to procurement, fraud encompasses collusion that sees an illegal cooperation from an involved party in order to gain a competitive advantage over the other. The authors also reveal that they have moved beyond employee education on the management of fraud to apply technological innovations of detecting, identifying, responding and preventing risks within the procurement system. The program also provides accurate numerical possibilities of illegal activities in order to prevent their occurrences before happening. Due to the subversive nature of fraudulent procurement operations, the authors assert that digital monitoring of the process would enable organizations to track purchasing activities and detect any illegal operations. In the advent of increasing technological applications, fraud has adapted sophisticated ways of that can be more elusive. In this case, their development of the computer-based program analyzes data from transactions and social media sites to detect fraud while incorporating the use of text analytics and procurement rules.
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Analysis
Procurement fraud may, therefore, take the form of embezzlement, mischarging on the cost of labor, product substitution with cheap, substandard commodities, selling of defective supplies, as well as rigging of bids where a commercial contract is illegally awarded to a party. At the same time, making false claims of reimbursements, bribery, and money laundering are also recognized as fraudulent processes ( Piper, 2017). For instance, fixing a price beforehand despite receiving other bids for formalities and soliciting something of value in order to influence another person to discharge their duties is a procurement fraud. However, despite the article’s affirmation in the use of an advanced computer program that manages risks in fraud, technological advancements have also empowered fraudsters to sharpen their techniques of stealing. Therefore, this means that including computer-based programs in managing procurement illegal activities would also raise the threat of hacking and a potential loss, distortion, or manipulation of information. For instance, an employee might gain unauthorized access to the computer-based system and alter data in order to hide illegal activities with the purchasing operations.
In conclusion, the development of risk management techniques should consider sufficient training of their staff members on how to detect, correct, and report any fraud. At the same time, they should be educated on the regulations provided for in the Procurement Integrity Act. Most importantly, vendors should be well vetted and a comprehensive market analysis is done on price quotations of products to rule out possibilities of fraud ( Piper, 2017) . This means that computer simulation programs that manage risks should be used alongside a trained workforce who are bounded by procurement laws and are aware of identifying and sealing any loopholes. After all, not everyone is technologically savvy.
References
Dhurandhar, A., Ettl, M. R., Graves, B. C., & Ravi, R. K. (2015). U.S. Patent Application No. 14/186,071 .
Piper, C. E. (2017). Contract and Procurement Fraud Investigation Guidebook . Routledge.
