INFORMATION AND COMMUNICATION TECHNOLOGY ON PROCUREMENT FRAUD
According to Chaffey (2007) Information and communication technology involves the use of computers and telecommunication especially internet to send and receive information. Globally information and communication technology is of utmost importance the total money spent on IT worldwide has been most recently estimated as US $3.5 trillion, and is currently growing at 5% p.a. doubling every 15 years, IT costs, as a percentage of corporate revenue, have grown 50% since 2002,Weele, etal (2010).Information and communication technology plays a valuable role throughout the Fraud Management Lifecycle. There is not a stage in the Fraud Management Lifecycle that does not benefit from the effective application of information technology resources or suffer from inefficient or inflexible systems, processes, or staff. Information technology resources are frequently the key to the success or failure of the activities in the individual fraud stages and at times to the success or failure of the entire Fraud Management Department (Ernst and Young, 2000), Information and communication technology (ICT) is defined as a process of automatic acquisition, storage, manipulation, movement, control, display, switching, interchange, transaction or reception of data or information Lysons(2000).In the modern world, competition among organizations is a common issue.
INFORMATION AND COMMUNICATION TECHNOLOGY ON PROCUREMENT FRAUD
Procurement fraud occurs when an employee or other person related to a firm unlawfully gains an advantage in purchasing goods or services for that firm. Some of the more common types of procurement fraud are overpaying for products (and receiving kickbacks), creating and falsely paying duplicate vendors, creating and paying fictitious vendors, and paying for over-shipments from vendors Saunders (1997).According to National fraud authority London (2010), in most developed countries, public procurement takes place within a framework of international obligations, such as the World Trade Organization’s Agreement on Government Procurement or the Procurement Directives made under regional agreements such as the European Union or the North America Free Trade Agreement. Uganda as a country procurement fraud has been experienced in many sectors and occasions including Temangalo land issue, mismanagement of national social security fund and during CHOGM in 2007 in Uganda. According to the Public Accounts Committee (PAC) report on the Commonwealth Heads of Government Meeting (CHOGM 2007) Kampala, the committee estimated that CHOGM expenditure almost doubled from the authorized and appropriate budget of two hundred seventy billions shillings (270,000,000,000/=) to over five hundred billions (500,000,000,000/=). According to PAC report (2010), some roads which were designed by the consultants were never worked on yet the designers had already been paid. Despite the fact there is constant improvement in ICT systems and the huge amount of money invested in ICT by the government, organizations are still incurring heavy losses in terms of high costs in procurement like inflated contracts over the budget, failure to finish work in time, leading to losses of tax payers’ money, this is very disturbing to all the stakeholders as to why such mishaps continue to happen. Basing on this background the researcher therefore seeks to investigate into the impact of information and communication technology on procurement fraud at NSSF.
INFORMATION AND COMMUNICATION TECHNOLOGY ON PROCUREMENT FRAUD
- Procurement fraud in developing countries.
According to transparency international (2006) unethical code of conduct including corruption, embezzlement, and fraud is high in developing countries and countries in east and west Africa have one of the highest levels of corruption and fraud in the world, though countries like Singapore and china also experienced high levels of fraud especially in early nineties in procurement Singapore in particular has reduced significantly and is arguably one of the least corrupt in the world this is mainly attributed to the harsh punishment given to the culprits in Singapore and above all the government commitment in fighting the vice and likewise china’s score in fraud has reduced significantly over the past decades. According to the Association of Certified Fraud Examiners (2009) procurement fraud is done through falsification of documents, non-delivery of services that are paid for, inflation of procurement prices and presentation of personal procurement expenses as business expenses. The association notes that procedures, rules and regulations are ignored and that some procurement officers double in initiating procurement and supplier selection as well as initiating procurement vouchers, all of which are acts that perpetuate fraud. Suppliers have business links with company employees and yet others use their relatives to supply goods and services at inflated prices.
1.3 Information and Communication Technology adoption in developing countries
INFORMATION AND COMMUNICATION TECHNOLOGY ON PROCUREMENT FRAUD
There are currently 1.2 billion people living under one dollar a day of which 70% are located in sub-Saharan Africa and south Asia. The two poorest regions of the world are also those with the lowest access to ICT, the business activities in these regions are also marred by corruption, fraud and as a result investors are reluctant to invest in these regions which have even worsened the situation of unemployment especially in the age bracket between 23 to 35 years. The gap in access to and use of ICT the so called digital divide often follows and reinforces existing inequality and poverty pattern. The digital divide has emerged both with in countries , where the rich educated and young (often males) are most likely to use ICT and between developed and developing countries, for example in march 2000 out of the 304 million people with internet access only 2.6 million were in Africa while 137 were located in the united states and Canada. By way of another illustration, the average OECD country has 11 times the per capita income of south Asian country but 40 times as many computers. (World Bank, 2004)
Overall research has concluded that developing countries benefit from ICT is more likely to accrue from consumption rather than production and it may take developing countries long to benefit fully from the information and communication technology which among many things has increased transparency in terms of reducing fraud in the business process, accelerated business activities , timely information sharing, and reduced barriers in doing business, (kraemer, 2004).
1.4 STATEMENT OF THE PROBLEM.
The NSSF is a national savings scheme mandated by government through the NSSF Fund Act, cap 222 to provide social services to employees in Uganda, established by an act of parliament in 1985 (NSSF Records 2010). NSSF uses E-procurement for contracts to achieve benefits such as increased efficiency, cost savings , improved transparency in procurement services , Despite this benefits, it is faced with numerous procurement challenges in the 2008 acquisition of 564 acre piece of land at 11 billion shillings NSSF was accused of procurement fraud due to failure to advertise procurement of that value,( New Vision 27 October 2008) , Apart from that the PPDA audit report 2012 also questions a number of procurement activities at NSSF including the contract for the supply of fumigation services in which it was marred by irregularities. All these irregularities happen despite the existence of ICT systems at NSSF, This study questions the impact of information and communications technology (ICT) on procurement fraud with case study of NSSF located at plot95 Kampala road.
1.5 Purpose of the study
The purpose of study is to establish the impact of Information and Communication Technology adoption on procurement fraud.
1.6Specific objectives of the study
The study shall be guided by the following objectives:
- To identify the proposed causes of procurement irregularities reported at NSSF.
- To identify various systems installed to detect such procurement irregularities.
- To suggest ways of minimizing procurement irregularities using ICT systems.
1.7 Research questions
The following research questions shall guide the development of this study:
- What are the proposed causes of procurement irregularities reported at NSSF?
- What are the various ICT systems installed to detect such procurement irregularities at NSSF?
- What are the ways of minimizing procurement irregularities using ICT systems at NSSF?
