by Brianna Crandall — April 23, 2014—BSI, the U.K.-based business standards company, has published BS 10501 Guide to Implementing Procurement Fraud Controls to raise awareness of the critical issue of procurement fraud and to give businesses the best tools to protect themselves and their reputations. The standard was developed by a committee of experts that included CIPS (the Chartered Institute of Purchasing and Supply), the City of London Police, and various fraud-related organizations.
A recent survey from CIPS showed that 9.3% of U.K. businesses had suffered at least one incident of procurement fraud in the last year. Alarmingly, the National Fraud Authority survey of 2012 estimated around £2.4 billion in losses to the U.K. public sector in 2011—almost 1% of the government’s entire procurement budget.
With such huge implications for cost and reputation, businesses of all types and sizes are now under scrutiny, and this is not just a matter for the private sector; as the National Fraud Authority’s survey showed, the public and third sectors also need to be vigilant. Research showed that a standard offering guidance on specific measures to help address multiple procurement fraud risks was needed, says BSI.
Andrew Coulcher, director of business solutions at CIPS, said, “Unlike fraud and bribery, procurement fraud requires different controls which are very specific. With that in mind we wanted to create an overarching piece of guidance that would help organizations from a very top level.”
BS 10501 will benefit legal, compliance, procurement and supply chain professionals in the banking, insurance, pharmaceutical, retail, energy, defense and security industries, as well as universities and the National Health Service (NHS).
Some of the benefits of BS 10501 include:
- Guidance on mitigating and managing procurement fraud risks
- Explanation of the scope and implementation of procurement fraud controls
- Demonstration of how segregation of processes will help manage procurement fraud risks
- Detailed guidance on procurement methods and processes
- Explanation of the importance of framework agreements
- Coverage of security aspects, including information (IT) and physical security, tracing, vetting, and supply chain security
Paul Guile, head of CIPS global procurement fraud advisory services, commented, “This is a growing problem which requires board level acceptance to stop organizations from being vulnerable. It is as much about educating from the top downwards so that all staff know what procurement fraud is, and how it can be avoided.”
