Where money leaves the business.
WHY IT IS VULNERABLE
Procurement decisions move money and they are made by individuals.
WHAT THE COMMON PROBLEMS ARE
Suppliers owned by staff or their relatives Inflated prices with a share returned Suppliers who exist only on paper Work paid for but not delivered Splitting purchases to avoid approval limits Specifications written to favour one supplier
WHAT CONTROLS ADDRESS THEM
Separation of duties: requesting, approving, receiving and paying by different people
Approval limits Competitive quotation above thresholds Verification that goods were received Supplier verification before onboarding Periodic review of supplier lists
WHY SEPARATION OF DUTIES MATTERS MOST
Single-person control over a purchase is where losses occur.
WHAT TO ESTABLISH
That nobody both approves a purchase and confirms its receipt.
WHAT SUPPLIER VERIFICATION SHOULD ESTABLISH
That the supplier exists and operates Who owns it That its details match its bank account
WHY OWNERSHIP
It identifies connections to your own staff.
WHAT TO CHECK
Supplier addresses and bank details against employee records.
WHY
Matching details are a common indicator.
WHAT TO ESTABLISH ABOUT PAYMENT DETAILS
That changes are verified independently, by telephone to a known number.
WHY
Fraudulent change of bank details is among the commonest frauds.
WHAT TO REVIEW
Suppliers added recently Suppliers with unusual growth Single-source arrangements Purchases just below approval thresholds
WHY THAT LAST ITEM
Splitting to avoid approval is a clear indicator.
WHAT TO RECORD
Decisions and their basis.
