Reducing Vendor Fraud Risk

All organizations can use the free U.S. federal Excluded Parties List System during their procurement processes to find questionable vendors and reduce the risk of fraud. CFEs and auditors should use this little-known Internet database in fraud examinations.

Jodi Rock, the manager of Tindermark Corporation’s purchasing department, received a call from the company’s manufacturing plant complaining about some of its raw materials. According to Sam, the plant manager, the materials were causing all sorts of headaches because they were not within the specifications required by the engineering department. Tindermark’s internal audit department investigated the problem. They found some interesting information about the vendor in question. Two years earlier, the U.S. federal government had brought a successful suit against the same vendor for supplying substandard materials to the Army.

USING THE EPLS TO PREVENT VENDOR PROCUREMENT FRAUD