Procurement, payroll and expenses fraud

Not all fraud arrives by email from outside. Some of the most persistent losses come through the routine internal processes that move money: buying, paying staff, and reimbursing expenses.

Procurement fraud

Procurement fraud abuses the buying process. Common forms include:

• Phantom vendors: a fake supplier is set up on the system, and invoices are paid for goods or services that were never delivered
• Kickbacks: an employee steers contracts to a particular supplier in exchange for personal payments or favours
• Bid rigging: suppliers collude, or an insider leaks information, so a supposedly competitive tender is nothing of the sort
• Split purchase orders: a large purchase is broken into smaller ones to stay under an approval threshold and avoid scrutiny

The common thread is an insider with influence over who gets paid, combined with weak checks on whether goods or services were actually received.

Payroll fraud

Payroll fraud manipulates the payroll to extract money. Classic examples are ghost employees, where a fictitious or departed worker stays on the payroll and someone collects their pay, inflated hours or overtime claims, and unauthorised changes to pay rates or bank details. Payroll fraud tends to be low value per month but long running, which is exactly why it can add up to serious sums before anyone notices.

Expenses fraud

Expenses fraud is often dismissed as trivial, but it matters for two reasons. First, it accumulates: duplicate claims, inflated mileage, personal spending claimed as business costs, and altered receipts drain real money over time. Second, it is corrosive. Someone who has normalised small dishonesty is a higher risk for larger dishonesty, and colleagues who see expenses fiddling tolerated learn that the organisation doesn't really mean what its policies say.

The defences for all three are similar: separate the person who requests from the person who approves, check that goods and services were genuinely received, reconcile payroll against known staff, and review claims properly rather than rubber stamping them.