British Standards Institution issues guide to help firms tackle "critical issue" of procurement fraud, which hit 9.3% of companies last year
The days of illicit kickbacks, rebates and cloak and dagger meetings in spit ‘n sawdust pubs with dubious vendors may be numbered. The British Standards Institution (BSI) has published a report to raise awareness of the “critical issue” that is procurement fraud.
The BS 10501 guide, entitled Guide to Implementing Procurement Fraud Controls, has been developed by a committee of experts, including the Chartered Institute of Purchasing & Supply (CIPS). It follows a survey revealing that 9.3% of businesses had fallen victim to at least one incident involving procurement fraud within the last year.
The results of a previous survey by the National Fraud Authority in 2012 revealed there was a whopping £2.4bn loss attributed to procurement fraud within the UK public sector in 2011 – that’s almost 1% of the government’s entire procurement budget. Vigilance has been stressed, not only for the private sector, but for businesses of all sizes.
The BSI report will benefit various industries throughout the UK, from legal and compliance to supply chain professionals within the banking, insurance, pharmaceutical, retail, energy, defence and security sectors, as well as universities and the NHS.
“This is a growing problem which requires board level acceptance to stop organizations from being vulnerable," said Paul Guile, head global procurement fraud advisory services at CIPS. "It is as much about educating from the top downwards so that all staff know what procurement fraud is, and how it can be avoided.”
Included in BS 10501 are:
- Guidance on mitigating and managing procurement fraud risks
- Explanation of the scope and implementation of procurement fraud controls
- Coverage of security aspects, including information and physical security, tracing, vetting, and supply chain security
- Demonstration of how segregation of processes will help manage procurement fraud risks
- Detailed guidance on procurement methods, and processes
- Explanation of the importance of framework agreements
“Being aware of what is happening in a business’s supply chain is a vital way to ensure that it is protected at all times from issues such as procurement fraud," said Anne Hayes, head of market development for governance and risk at BSI.