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New standard can help organisations prevent procurement fraud

07 April 2014

 

A Teesside University academic is part of a team of experts who have developed an initiative to tackle multi-billion pound fraud.

Rob McCusker, Reader in Fraud and Financial Crime, helped to establish the first ever British standard to mitigate procurement fraud.

The standard, published in March, recommends segregation of duty – giving separate responsibility for raising orders, delegating procurement authority to the correct people – the higher the value, the higher it needs to go, and verifying work completion or supply and payment authorisation.

Procurement fraud cost the public sector as much as £2.3m a year and is any fraud relating to the purchasing of goods and services. Examples include price fixing, bid rigging, cover pricing, false invoicing, overpayments, false payments, altered payment details and diverted payments and the delivery of inferior or sub-standard products. Procurement fraud is particularly complex and difficult to detect.

Research undertaken for the Annual Fraud Indicator revealed almost one in ten companies had suffered procurement fraud in the last year and over 40 per cent of firms said that spend on construction is at greatest risk from procurement fraud.

Rob, who is also director of Teesside University’s Centre for Fraud and Financial Crime, worked alongside experts from the Chartered Institute of Purchasing and Supply (CIPS) and the British Standards Institute (BSI) team to put together the first British standard.

The standard aims to raise awareness of the problem of procurement fraud, as well as enable organisations of all sizes and types to identify that it is occurring or has occurred and put in place controls to mitigate risk. It is seen as an effective way to identify historical and current procurement fraud, while granting better protection going forward.

Rob said: 'The standard is the first of its kind and will assist organisations in dealing with procurement fraud risk mitigation.

'The committee involved in putting the standard together had a wide breadth of experience and I am pleased to have been able to make a contribution to such an important piece of work.

'Procurement fraud is costing billions of pounds and we hope that this is a big step towards reducing that figure and providing more protection for individuals and organisations.'

Rob was asked to assist with the British standard after working closely with the global procurement fraud advisor to CIPS, Paul Guile, and helping to build the University’s reputation as a leading centre for expertise in fraud and financial crime.

Other organisations involved included the Serious Fraud Office, the Ministry of Defence, HSBC and the NHS.

David Noble, CIPS Chief Executive Officer, described the standard, known as BS 10501 as a 'reliable, cost-effective solution that enables organisations to mitigate procurement fraud risk.'


 
 
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