Fraud is usually described as someone obtaining something by deceit. Unfortunately there is no precise legal definition of fraud rather, provided here, is a collection of activities that have been identified by HM Treasury as falling within the context of fraud – theft, false accounting, bribery, corruption, deception and collusion. Definitions are available here.
Within procurement there is an ongoing risk of fraud throughout the procurement cycle, from the initial identification of need to the receipt of the goods or services and eventual payment. HM Treasury has identified the following potential procurement-related frauds:
- Manipulating tenders/collusive tendering (including rings and cartels)
- Rigging specifications in favour of one supplier
- Product substitution or sub-standard work or service not meeting contract specifications
- Theft of new assets before delivery to end user and before being recorded in the asset register
- Fraudulent (false or duplicate) invoicing for goods and services not supplied or for interim payments in advance of entitlement
- Improper or unauthorised use of Government [institution] furnished equipment or information
- False accounting and cost misallocation or cost migration between contracts
- Goods ordered for personal use, including misuse of the Government [Institution’s] procurement cards/credit cards and e-procurement facilities
- Provision of fraudulent test and quality assurance certificates
- Corruption or attempted corruption of Crown Servants [Institution staff]
Adherence to the institution’s procurement policies and procedures will help ensure that accusations of fraudulent activity will not be made against staff involved in purchasing activity.
Further guidance is available:
- Managing the Risk of Fraud: A Guide for Managers May 2003 (HMT) [pdf 305kb]
- Good Practice in Tackling External Fraud April 2004 (NAO/HMT) [pdf 470kb]
- Fraud Report 2006-07: an analysis of reported fraud in Government departments October 2007 (HMT) [pdf 460kb]
- Fraud Casenotes - case studies based upon actual frauds (HMT) [pdf 134kb]
Should you have concerns regarding potential fraudulent activity within your institution, you should speak to your line manager, your Head of Procurement or seek guidance from the Human Resources Department.
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