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Billing Fraud and How to Spot them

Fraud

Estimated reading time: 3 minutes

 

Fraud

Billing Fraud and How to Spot them

 

Combating procurement fraud is vital due to the disastrous impacts’ procurement fraud brings. In Southeast Asia, procurement fraud costs US$140billion each year. Nearly all organisations will have been victims of procurement fraud and the consequences can be much greater than the value of the fraud. The most common types of fraud include kickbacks and bribes, bidding, variation abuse, billing, undisclosed interest, contract specifications and personal interest.

Here is a list of the most common procurement fraud schemes:

  • Bribes and Kickbacks
  • Collusive Bidding by Contractors
  • Change Order Abuse
  • Co-Mingling of Contracts
  • Conflict of Interest
  • Excluding Qualified Bidders
  • Failure to Meet Contract Specifications
  • False, Inflated or Duplicate Invoices
  • False Statements and Claims
  • Fund Abuse
  • Leaking of Bid Information
  • Manipulation of Bids
  • Fictitious Vendor
  • Product Substitution
  • Purchases for Personal Use or Resale
  • Rigged Specifications
  • Split Purchases
  • Unbalanced Bidding
  • Unjustified Sole Source Awards
  • Unnecessary Purchases

 

For private sector organisations, successfully tackling fraud can boost profits by several percentage points. For governments, tackling procurement fraud effectively can boost its reputation, thus, attracting more inward investment, improving public services and, with globalisation, making it a more competitive nation.

 

Billing Fraud and How to Spot them

Billing fraud come in the form of false, inflated or duplicate invoices. Suppliers or contractors can intentionally submit false (meaning that no services were provided), duplicate or inflated invoices.  The scheme can involve a contractor acting alone or in collusion with an employee of the victim organization who shares in the profits.

To prevent this from happening, there are certain ways to spot them. In general, having weak or unenforced controls in the receipt of goods and payment of invoices, or copied or altered supporting documents may increases the risks of fraud.

Red flags of false invoices include invoiced goods or services cannot be located in inventory or accounted for, no receiving report for invoiced goods or services, questionable or no purchase order for invoiced goods or services, inflated invoices, Invoice prices, amounts, item descriptions or terms exceed or do not match contract terms, purchase order, receiving records, inventory or usage records, and discrepancies between invoice and supporting documents.

Red flags of duplicate invoices include either 1) Multiple invoices in the same or similar amount to the same or related vendors, on the same invoice or purchase order or for the same or similar goods or services., or 2) Multiple invoices with the same description of goods or services, amount, invoice number, purchase order number. Lastly, if the total payments to vendor exceed total purchase order or contract amounts.

 


Procurement Certification in Combatting Risk and Fraud is a 3-day training course held from 25-27 February 2019 (Kuala Lumpur). Delegates attending this workshop will understand how to reduce the risk and cost of fraud to their organisation and how to secure better value from better procurement and better contracting outcomes. This course is also certified by The International Association for Contract & Commercial Management (IACCM), where delegates will be able to achieve world-class standards in their trading relationships. 

 

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Opus Kinetic believes that people are why organisations are successful, and giving people the knowledge to perform well at their job is integral for success. We pride ourselves as the premier provider of knowledge, offering acclaimed in-house trainings, and many others professional training courses spanning from various industries. Our training courses are well researched and updated with the latest industry trends. For more information on our professional training programs, visit us at http://www.opuskinetic.com/training.  

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