Vendor Fraud: Finding Deals Gone Awry

Fraud examiners, working with teams of diverse staff members, can discover deceitful vendors by conducting regular audits. 

The company's reputation was good. There were no complaints from the product's users. Everything was looking good until... "Walt" stared at the vendor's 1099 tax forms. Here was incontrovertible evidence that the vendor was defrauding his company - with inside help! A pipe dream? Hardly. It can happen when fraud examiners perform careful vendor audits.

Just a decade ago, most companies never even thought of auditing their vendors. Times are changing. With the advent of new complex pricing arrangements such as time and materials, cost-plus, and list-less agreements, even purchasing departments are recognizing the need to verify critical vendor data. When vendors promise to build a warehouse for a fixed percentage over their cost of materials and labor hours, who verifies the underlying data? When a vendor agrees to sell goods at a fixed markup over cost, who verifies the real cost? Even experienced purchasing executives find themselves feeling like teenagers in a used-car dealership. Today, more executives are relying on fraud examiners to verify contract compliance through quick, hard-hitting vendor audits.

Right-to-audit Clause