TIPS (TO ENSURE PROPER SERVICE?): THE NEED FOR INTERNAL CONTROLS OVER BID RIGGING ON CONTRACTS

According to the Association of Certified Fraud Examiners ( ACFE), the term occupational fraud has been defined as the use of one's occupation for personal enrichment through the deliberate misuse or misappropriation of the employing organization's resources or assets. In other words, an e...

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Bibliographic Details
Published in:Construction Accounting & Taxation 2012-07, Vol.22 (4), p.25
Main Authors: Reed, Tracy, Bagley, Penelope, Marden, Ron
Format: Article
Language:English
Subjects:
Bids
Bribery
Conflicts of interest
Construction contracts
Construction industry
Corruption
Employees
Extortion
Fraud
Internal controls
Kickbacks
Telephone hotlines
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Summary:According to the Association of Certified Fraud Examiners ( ACFE), the term occupational fraud has been defined as the use of one's occupation for personal enrichment through the deliberate misuse or misappropriation of the employing organization's resources or assets. In other words, an employee abuses the trust placed in him by an employer for personal gain. Corruption can result from any one of a number of situations including conflicts of interest, bribery, kickbacks, illegal gratuities, and/or economic extortion. Conflicts of interest result from a situation where an employee, manager, or executive has an undisclosed economic or personal interest in a transaction that can adversely affect the company. The key word here is undisclosed. The victim organization is unaware that its employee has divided loyalties. Some internal controls that would help avoid bid rigging through collusion of an employee with external contractors would include: 1. being fair and equitable, 2. watching yourself, 3. Being an informed buyer, 4. soliciting bids from as many suppliers as possible, 5. encouraging communication, and 6. being aware. Even with internal controls in place, collusion and corruptions, particularly in bid rigging, can still occur. Regrettably, a company cannot control the actions of their bidders, and even the most dedicated employee may compromise his or her integrity in contract-awarding decisions because of monetary incentives.
ISSN:1054-3007