Legal Concepts and Contracting

Fraud Prevention in Contracts & Purchasing

Learning Objectives:

• Common business ethics
• Types of internal fraud related to contracts & purchasing
• Types of external fraud related to contracts & purchasing
• Steps in corruption prevention
• Anti-corruption policy statements & contract clauses
• Stages in the procurement process where fraud can occur
• Elements of a good procurement system to combat fraud
• Expectation for continuous improvement as anti-corruption tool
• Standard of ethical and professional conduct
• Fair and reasonable price determination to prevent corruption
• Basic methods of fraud detection
• Resources to increase knowledge & skills sets

Seminar Outline:

Setting the Stage

• Business ethics
• Defining fraud
• Impact of fraud and corruption
• Corruption perception index
• Influences that cause corruption
• Rewards and risks for participating in corrupt activities
• Duties of employees acting as agents

Where Is Internal Fraud Most Likely to Occur?

• Stages of the contracting and purchasing process where fraud is most likely to occur
• Statements of work
• Types of employee fraud related to the procurement process
• Types of collusion
• Elements of a good procurement & competitive bidding process
• Authority levels
• Determining fair and reasonable pricing
• Main elements in a competitive bidding process

Types of External Fraud

• Types of external fraud and overcharging
• Fraud prevention process for engaging consultants
• Reverse auctions
• Supplier qualification
• Major steps to effective prevention
• Checklist for compliance policies
• Model code of conduct
• Management responsibilities in corruption prevention
• Due diligence in hiring & promoting personnel
• Contract & purchasing professionalism

Ethics Clauses & Contract Clauses to Assist in Prevention

• Disciplinary action
• Standards of ethical and professional conduct
• Gratuities & gifts
• International effort to fight corruption
• Corrupt practices act
• "Blow the Whistle" procedures
• Contract clauses that assist in prevention
• The Integrity Pact

The Warning Signs of Fraud

• Methods of fraud concealment
• Potential warning indicators of fraud by personnel
• Basic methods of fraud detection
• Expectations for continuous improvement
• Continuous improvement programs
• The use of strategic purchasing plans to reduce fraud