Vanguard
What is Fraud?
Deception or breach of confidence to gain an unfair advantage. This can be in the form of an act, omission, or concealment.
Who is the typical fraudster?
Research indicates that the typical corporate fraudster is: Male, well-liked and respected, greedy, has pressing financial need e.g. has a gambling or drug problem, college educated, close relationship with suppliers, and hardworking. Other research indicates that women over age 45 are most likely to commit inter-office fraud and embezzlement in hospitals (HFMA, 2007).
Who can commit fraud in a business setting?
In our setting, a fraud can be committed by a number of different entities: an individual within our client’s organization; an individual within the vendor’s organization, or by the supplier itself.
How can fraud be committed by someone in our Client’s organization?
There are many different methods that can be used to siphon money within an Accounts Payable department. Some of the more common instances: a clerk or purchasing agent can use a personal social security number as a “Vendor Number” and submit invoices to be paid; The employee can alter a returned check to be payable to himself; Business checks can be stolen and written out to someone posing as a vendor (in which case, there would be no Purchase Order to back up that transaction).
How can fraud be committed by someone in a Vendor’s organization?
A vendor representative makes contact with the Accounts Payable area of a business and explains that the supplier's address and banking information have changed. The fraudster requests that all future payments for this supplier be sent to this new bank account and/or mailing address.
How can a vendor/supplier be fraudulent?
A valid vendor may have gone out of business officially, yet is still billing the client as if they were still providing a service. A vendor “representative” with fake credentials and materials can present themselves to the client. Business “identity theft”; not shipping the correct products; not issuing credits for returned products; charging more than the contracted rates; being completely “fake”, charging inflated freight fees; billing incorrectly for taxable items, then retaining the difference and so on.
What types of information can show a higher risk of fraud?
Some examples of high risk indicators are: Mismatched address/phone/Federal Tax ID#, Fed. Tax ID matches a different business name, Business owner on OFAC list, Phone number is actually a pager, business address is residential, company is listed as no longer in business, remit-to address is a prison, business is on the Secretary of State’s disallowed list.
What happens if a vendor falls into the high risk category?
At the time of setup Global Edge will partner with our client to determine what action should be taken relative to maintaining the ongoing relationship. Some conditions may warrant seeking another supplier while others are less serious and allow for continued business opportunities.
How would Global Edge deal with transactions that are determined (after the fact) to be fraudulent?
Using our MicroScan technology, Global Edge can perform a recovery audit on the vendor in question, and all of your transactions with that vendor within the previous 36 months. Any funds recovered from the audit would be subject to a contingency fee.
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