Contract and procurement fraud
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- Phases in the Procurement Process
| Petty Cash Funds
A petty cash fund is an amount of cash that is kept entirely separate from an organisation’s general cash and is intended to be used for small, incidental purchases Thus, petty cash funds provide a simple and economic method of making small cash purchases (e.g., postage dues and delivery fees). Generally, one person, called the custodian or cashier, is responsible for controlling the cash fund and documenting the disbursements made from the fund. Phases in the Procurement Process Although there are various methods that a procuring entity might use to acquire goods or services, purchasers typically use bidding processes that provide open and free competition. This discussion examines the phases of procurement processes employing competitive bidding mechanisms. To review, in competitive bidding, each bidder competes for a contract based on the specifications set forth by the purchasing company. Vendors submit confidential bids stating the price at which they will complete a project in accordance with the purchaser’s specifications. Accordingly, competitive procurement processes require contractors to competitively bid on contracts, and they are designed to maximise the benefits of free and open competition. Competitive bidding, however, can create a cutthroat environment that is conducive to fraud, and any advantage one vendor can gain over his competitors is valuable. Consequently, procurement through competitive bidding is susceptible to fraud. For the purpose of fraud detection, procurement processes that employ competitive bidding mechanisms can be reduced to four basic stages: The presolicitation phase The solicitation phase The bid evaluation and award phase The post-award and administration phase Fraud can occur in each of these phases, and the following discussion explaining the phases of procurement contains corresponding flowcharts showing the types of procurement fraud schemes that occur during each of the four phases. The procurement fraud schemes used in the flowcharts are discussed in the “Categories of Procurement Fraud Schemes” section that follows. Download 0.62 Mb. Share with your friends:
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