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The anti-fraud policy must contemplate three elements: prevention, control and reaction.

PREVENTIONPreventionthrough the appropriation of the organization's values ​​by its workers, which in turn explains the possible consequences of fraud for the organization. Organizations should also seek to establish a code of Ethics and Conduct, which must be communicated and disseminated throughout the organization, including the appropriate communication channels and complaint formats. Thus, staff should be trained in the identification, categorization and use of these channels and formats. In short, establish alert mechanisms that can anticipate and prevent the commission of fraud.
CONTROLControlcreating an Anti-Fraud Commission whose responsibility is the investigation and verification of compliance with the policies of the institution, dedicated to the systematic or ad hoc examination of the practices observed by persons or bodies of the institution. This commission will be in charge of establishing a compliance program with the established policies and norms and their monitoring. For a good information base to exist, staff must feel safe when reporting, but at the same time, they must feel the responsibility to provide truthful information, so clear responsibilities must be established and due protection to the complainant and protection against false reports.
REACTIONReactiondisplaying the principle of zero tolerance through quick and determined actions, always under strong evidence. This is only achieved with the collaboration of whistleblowers and in-depth investigations and the prior establishment of appropriate and consistent measures. Except for security risks that advise against it, these processes should be made public, and communicated among the staff or even with our donors and beneficiaries, so it will be necessary for there to be consistent in these actions. These communications are usually sensitive and should be studied and planned in advance.

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Key red flags to watch out for may include, but are not limited to:

Related to Suppliers

  • Undisclosed conflict of interest.
  • Winning suppliers outsource to losing bidders.
  • The last provider to submit a bid wins the contract.
  • Offers that look similar on paper, font, color, spelling errors, printing, etc. (collusive bid).
  • Inflated invoices or purchase orders.
  • The winning bid is higher than the rate from the market.
  • The winning bid is identical to the budget.
  • Fictitious suppliers or suppliers without existence or physical address
  • Turnover pattern of winners.
  • Partial delivery of goods or services
  • Substitution of goods when the quality of the delivered items differs from the supplied/proposed samples at the bidding stage.
  • Qualified contractors do not submit bids.

Related to Personnel

  • Manipulation of the evaluation criteria after the opening of the tender to award the contract to a preferred supplier.
  • Contracts awarded by single source or non-competitive process.
  • Cancellation of large quantities of goods such as junk or obsolete merchandise.
  • Requirements defined in a way that only a specific manufacturer or supplier can meet.
  • Multiple purchase request started in close proximity for similar requirements to avoid boundaries threshold.
  • A staff member does not separate duties
  • Excessively narrow or wide specifications.
  • Officials do not delegate their responsibilities or they refuse to go on vacation.
  • There is no clear information on the presentation of offers.
  • Inadequate documentation (no PR, OC, CBA and GRN).
  • Overly friendly relationship between a provider and a Head of Procurement.
  • Unusually high exemption rate.
  • Tender announcements scheduled to match with holidays.

References

  • SPHERE PROJECT, Handbook (2018)
  • INTERNATIONAL REVIEW OF THE RED CROSS (2016). Principles guiding humanitarian action.
  • CALP The Cash Learning Partnership (2018). Minimum Standards for Market Analysis (MISMA)
  • ECHO, EUROPEAN COMMISSION DIRECTORATE GENERAL FOR HUMANITARIAN AID (June 2019). Guidelines grant/contribution agreement with humanitarian organizations
  • ECHO, EUROPEAN COMMISSION DIRECTORATE GENERAL FOR HUMANITARIAN AID (May 2020). Framework partnership agreement with humanitarian organizations
    • ANNEX III; GENERAL CONDITIONS
    • ANNEX IV; RULES AND PROCEDURES APPLICABLE TO PROPERTY, SUPPLY, WORKS AND SERVICE CONTRACTS AWARDED WITHIN THE FRAMEWORK OF HUMANITARIAN ACTIONS FINANCED BY THE EUROPEAN COMMUNITIES
  • ICRC, INTERNATIONAL RED CROSS AND RED CRESCENT MOVEMENT (2014). Market Analysis Guidance
  • ICRC, INTERNATIONAL RED CROSS AND RED CRESCENT MOVEMENT (2014). Rapid Assessment for Markets
  • WFP, WORLD FOOD PROGRAME, (2020). Goods and Services Procurement Manual
  • SC, SAVE THE CHILDREN; Procurement guidelines
  • ACF, ACTION AGAINST HUNGER; Supply Chain guidelines

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