Supply chain fraud exposes companies to substantial losses and potential liability. In its 2020 annual Report to the Nations, the Association of Certified Fraud Examiners estimated that companies lose approximately 5% of their revenues to fraud each year. When applied to gross worldwide production in 2019 of $90.5 trillion, this amounts to roughly $4.5 trillion in annual fraud losses. Additionally, in instances where bribes are funneled through third parties, the losses are magnified by the liability and penalties associated with violating anti-corruption statutes.
Asset misappropriations are the most common tactic perpetrators use to defraud their employers, with fraudulent disbursement schemes comprising an overwhelming number of cases. Interestingly, the top 2 methods used to conceal these fraud schemes include:
- Creating fraudulent supporting documentation, and
- Altering actual third-party supporting documents.
This paper examines how companies can apply various forensic protocols and utilize specialized data mining tools to identify fraudulent disbursement schemes in their infancy. These tools allow mitigating steps to be taken promptly and halt the outflow of critical cash resources.
For your free, full copy of “Supply Chain Fraud”, please contact Jeffrey Harfenist.