Keeping Fraud

Controls in the Forefront

Keeping Fraud Controls in the ForefrontAs the COVID-19 pandemic continues to have rippling effects on all businesses, no matter the size or strength, it is imperative that companies stay committed to minimizing fraud in its organization. 

Staying ahead of fraud can require extra resources for companies, in both time and money, and many companies are operating with reduced resources and shifted employees.  This article will highlight three areas for organizations to stay on top of as it relates to minimizing fraud in the workplace.


For companies that depend extensively on suppliers to meet their customer demands, there may be more pressure to ignore some of the vendor pre-qualification checks typically completed before using a vendor for the first time.  A company may be quick to use a vendor who promises expedited shipping, which is tempting considering the worldwide shipping delays.  Companies usually pay vendors using predetermined payment terms, but a new vendor promising fast shipping with a prepayment could be enticing to a company struggling to get their supplies.  However there is an increased risk of fraud with prepayments because the vendor may take the money without providing the goods or services.  Bribes from new vendors may also be tempting to employees working in procurement as they may be facing their own personal financial struggles.  It is crucial that procurement departments continue to vet vendors according to their established new vendor policies and procedures to minimize the risk of fraud in the procurement cycle. 


Similar to the fraud risks related to using new vendors, companies may decide to enter agreements with questionable customers to help minimize the effects of COVID-19 on their revenue numbers.  It may be tempting to accept new customers to earn coveted sales without verifying their payment history.  Typically credit and reference checks are completed on new customers ensuring they are paying their bills timely.  It may be tempting to skip this first step as it can take some time to collect responses.  For the purpose of increasing sales numbers it would be easy to skip important paperwork and the setting of favorable payment terms, instead accepting unfavorable payment terms that make it unlikely to see a customer’s payment within a reasonable amount of time.  

Third-Party Agreements:

Setting up third-party agreements to assist companies in staying afloat can meet some critical company needs,, however there is an increased risk of fraud when the third party has not been properly vetted.  Before signing a third-party contract, it is imperative that the third parties are analyzed through credit checks, business references, getting-to-know-you procedures, and historical sanction reviews.  Some of these control checks may be hard to complete during the pandemic, making it even more important that companies develop ways to complete these checks virtually.  


Whether a company is working with new vendors, selling to new customers or entering third-party agreements, it is increasing the areas of fraud risk for the company.  The common thread among all three of these areas is that these controls require both time and money for a company, and both of which have been harder to come by for many companies affected by the COVID-19 pandemic.  However, being diligent in applying these controls can save a company from more costly problems in the future.