26 October, 2019
In our previous newsletter, we highlighted that one of the most common types of fraud in the workplace is payroll fraud, commonly known as a "ghost employee" scheme. In this newsletter we will discuss fraud in a company's supply chain. This type of fraud could also involve a third party or documents which relate to a third party.
One of the most common occurrences we have seen in supply chain fraud is creating a fake vendor. Vendor fraud may be committed by an employee by setting up a fake vendor to draw funds from the company. Often, however, there is a collusion with a third party who is an actual vendor but somehow forges the relevant documents so they can benefit from the company without giving the same quality or quantity of the products or services the company is supposed to receive.
Companies that do not have good standard terms of practices or well-established procurement protocols are more exposed to this type of fraud. In fact, even when there are good procurement protocols, exposure still exists as fraud of this kind is often committed by internal collusion. We will share with you some of the red flags on spotting possible fraudulent activities in our next newsletter.
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