Guide to Preventing Workplace Fraud - Chubb Group of Insurance ...

Vendor management. A company can protect itself from vendor fraud by
using an effective vendor screening program. 2 Such a program can:
■
Verify that a vendor actually exists and that the identification data
provided by the vendor (address, for example) is accurate.
■
Verify a vendor’s ownership and the identity of key management
personnel (and screen for potential conflict-of-interest concerns).
■
Determine if a vendor, its owners and affiliates, or its key
management personnel have a history of criminal activity.
■
Determine if a vendor, its owners and affiliates, and its key
management personnel have an acceptable business reputation.
■
Verify that a vendor has the requisite qualifications, licenses,
certifications, permits, and insurance coverage.
A company may also wish to include the following in its vendor
fraud program:
■
Procedures for approving orders, authorizing payments, issuing
checks, and reviewing vendor payments, bearing in mind appropriate
segregation of employee duties.
■
Prepayment review of vendor invoices, including reconciliation with
company orders and authorizations, receiving reports, returns, and
adjustment records.
■
Internal audit of the accounts payable function.
2 Always obtain competent legal advice before implementing vendor screening programs. For
example, screening programs that include credit history checks must be properly administered
in order to maintain compliance with applicable laws.
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