Please take a careful look at this image that was posted a while back by JL Moreau. I hadn’t realized until now that there could be as many as 20 difference ways that fraud can happen.

To minimize your risk, you do need to have controls in place. You also need to test your controls on a regular basis. Some companies have an internal audit team and their job is to review to make sure that the chance of fraud is greatly reduced.

Yet, we all hear of examples of fraud where the culprit didn’t get caught until extensive damage was done. Why do you think that this happens? Poor pay, gambling addiction, sense of entitlement and hating the job and company all are contributing factors to why fraud happens. Too busy and too trusting might also be an issue.

What can you do? You should start by splitting responsibilities. Have your supply chain professionals cross trained and then have them work with new suppliers, departments and commodities. Do a test to see where the gaps or deficiencies are. Make sure that everyone is aware that a surprise audit is a possibility.

Invest in a 3rd party Supplier Management Solution so that a lot of the checks and balances are in place.



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