IMPACT OF INFORMATION AND COMMUNICATION TECHNOLOGY ADOPTION ON PREVENTION OF PROCUREMENT FRAUD

A  CASE STUDY OF NSSF, HEAD QUARTERS, KAMPALA

CHAPTER ONE

1.0 INTRODUCTION

This chapter covers the background of the study, Statement of the problem, purpose of the study, research objectives, research questions and scope of the study, significance of the study and definition of key terms.

1.1 Background

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).

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.

1.2 Statement of the problem

NSSF is a national savings scheme mandated by the Government of Uganda 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 and 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, It is against this background that the researcher is examining whether  adoption of Information and Communication Technology (ICT) has an impact on minimizing procurement fraud that have been reported in the past.

1.3 Purpose of the study

The purpose of study is to establish the impact of Information and Communication Technology adoption on prevention of procurement fraud.

1.4 Specific objectives of the study

The study will be guided by the following objectives:

1. To assess the effects of ICT systems adoption on prevention of procurement fraud.
2. To identify various ICT systems installed to detect such procurement fraud at NSSF.

• To establish the challenges of adopting ICT system to prevent procurement fraud.

1.5 Research questions

The following research questions will guide the development of this study:

1. What are the effects of ICT systems adoption on prevention of procurement fraud?
2. What are the various ICT systems installed to detect such procurement fraud at NSSF?

• What are the challenges of adopting ICT system to prevent procurement fraud?

1.6 Scope of the study

The study scope will cover the following aspects;

1.6.1        Content scope

The content scope will cover the following aspects: assess the effects of ICT systems adoption on prevention of procurement fraud, to identify various ICT systems installed to detect such procurement fraud at NSSF and to establish the challenges of adopting ICT system to prevent procurement fraud.

1.6.2 Geographical scope

The study will be conducted at NSSF headquarters located at plot 95 Kampala road.

1.6.3 Time scope

The period of investigation will be from February to August 2017.

1.7 Significance of the study

The study findings may help the procurement department of NSSF in knowing the benefits of ICT on reduction of procurement irregularities.

According to the Transparency International 2006 Uganda is one of the most corrupt countries in the world and the research findings may therefore help the government in knowing the causes of procurement fraud and make relevant laws to curb the vice.

This research finding may benefit future researchers in enriching their knowledge on the various ICT systems used to reduce procurement fraud /irregularities in an organization hence helping them choose on the pool the best system to use.

1.8 Definitions of key terms

 Information and Communication Technology

Information and communication technology is defined as automatic acquisition, storage, manipulation, movement, control, display, switching, interchange, transaction or reception of data or information. Lysons (2003).

The term ICT is now also used to refer to the convergence of audio-visual and telephone networks with computer networks through a single cabling or link system, There are large economic incentives (huge cost savings due to elimination of the telephone network) to merge the audio-visual, building management and telephone network with the computer network system using a single unified system of cabling, signal distribution and management, William Melody etal, (1986).

 Fraud

Fraud is the crime of gaining money or financial benefits by a trick or by lying, oxford dictionary (1999). Fraud is a purposeful deception, misrepresentation, or concealment of facts intended to cause injury or loss to another party, typically for the sake of one own direct or indirect gain.  Norman Katz (1996),

 Procurement

Procurement is the acquisition of goods, services or works from an outside external source. It is favourable that the goods, services or works are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quality and quantity, time, and location. Corporations and public bodies often define processes intended to promote fair and open competition for their business while minimizing exposure to fraud and collusion.

Weele et al, (2010). Procurement simply means acquisition by purchase, rental, lease, hire purchase, license, tenure, franchise, or any other, contractual means, of any type of works, service, or supplies or any combination PPDA ACT 2003.

Procurement is a function for obtaining by purchase, lease or other Legal means equipment’s, materials, supplies and services required by an undertaking for use in production. (Lysons, 2000).

 Procurement Irregularities.

This is where procurement process is marred by mistakes i.e. Violation of procurement procedures, the use of high –ranking officials to influence procurement decision making and bribery-induced violations of procurement procedures by the government officials in collaboration with providers.(Basheka 2009)

This involves the behaviour of the officials in the public or private sectors to improperly or unlawfully enrich themselves and or those close to them to induce others to do so by misusing the position for which they are placed. (Asian Development Bank, 2003).

 Procurement fraud

According to National fraud authority (2011), procurement fraud is a deliberate deception intended to influence any stage of the procure-to-pay lifecycle in order to make a financial gain or cause a loss. It can be perpetrated by contractors or sub-contractors external to the organization, as well as staff within the organization.

Procurement Fraud is a practice which includes the offering, giving, receiving, or soliciting of anything of value to influence the action of a public official in the procurement or disposal process or in contract execution. (The Public Procurement and Disposal of Public Assets Act 2003).

CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

This chapter discusses what various scholars have written about Definitions of information and communication technology, definition of procurement, definition of procurement fraud, definition of procurement irregularities. It mainly covers: assessing the effects of ICT systems adoption on prevention of procurement fraud, identification of various ICT systems installed to detect such procurement fraud at NSSF and establishing the challenges of adopting ICT system to prevent procurement fraud.

2.1 Definitions of information and communication technology

Information and communication technology refers to the use of automated machines especially computers in dealing with transactions that require interaction electronically between the sender and the receiver (Chaffey, 2007).

Information and communication technology is the process of automatic acquisition, storage, manipulation, movement, control, display, switching, interchange, transaction or reception of data or information ( Lysons, 2000).

Information and communication Technology works in the same way like e-procurement, and is defined as the use of internet to operate the transactional aspects of requisitioning, authorizing ordering, receiving and payment process, for the required service or product.

2.2 Overview of the concepts of procurement.

Procurement refers to the acquisition of goods, services or works through purchase, rent, lease, franchise or any other legal means considering the 3 Rs like from the Right: place, time, price, quantity, and quality by use of shareholder’s money.  (Farrington et al, 2006)

2.2.1 Overview of procurement irregularities

This is where procurement process is marred by mistakes i.e. Violation of procurement procedures, the use of high –ranking officials to influence procurement decision making and bribery-induced violations of procurement procedures by the government officials in collaboration with providers.(Basheka 2009)

Procurement Fraud is a practice which includes the offering, giving, receiving, or soliciting of anything of value to influence the action of a public official in the procurement or disposal process or in contract execution. (The Public Procurement and Disposal of Public Assets Act 2003

2.3 THE EFFECTS OF ICT SYSTEMS ADOPTION ON PREVENTION OF PROCUREMENT FRAUD

Procurement fraud, can be defined as dishonestly obtaining an advantage, avoiding an obligation or causing a loss to public property or various means during procurement process by public servants, contractors or any other person involved in the procurement process

The following are the effects of procurement fraud according to different scholars;

ICT enables the organization in implementation of the e-catalogue systems which enables an organization to have an efficient system of analyzing supplies capability, Electronic catalogues can be understood as electronic documents, describing the offered products/services of a supplier for a specific call for competition (e.g. prospectuses). Therefore, the content and format of catalogues must enable suppliers to easily and unambiguously present/describe their offered products, including pricing details. In order to fully benefit from the use of catalogues, it is desirable that their content and format, as well as the way catalogue data is exchanged between parties, be standardized, so as to enable their automated processing. Therefore, cross-border interoperability of catalogues is fundamental, (Aberdeen group, 2006).

Cost Reduction, Information and Communication Technology not only reduces the cost of transactions, it also improves process efficiency and can reduce administrative and other costs. Manual (phone and fax) communications are reduced or eliminated, as are paper invoices and their associated costs , most of these costs in procurement include , costs of communication with the supplies this therefore will minimize the chances of the procurement management in organization to commit procurement irregularities, (Clarke, 1998).

Information and communication technology has increased on the Productivity of the organizations procurement staff and minimized on the chances of procurement irregularity, Enterprises that implement e-procurement report that procurement, accounting, and other corporate functions are more productive now than with traditional buying methods. E-procurement systems provide a standardized approach to rolling out efficient processes to not only procurement but all departments involved in transaction processing and financial recordkeeping. Increased Spend under Management One of the most compelling findings in the 2004 Aberdeen benchmark survey was the ability of procurement users to bring more spends under management of the procurement organization. Increasing spend under management helps ensure the enterprise achieves maximum spending lever, (Accenture, 2006).

Visibility of spend, information and communication technology enables Centralized tracking of transactions enables full reporting on requisitions, items purchased, orders processes and payments made. Information And Communication Technology therefore enables an organization in tracking of its expenditure and ensuring that they comply with approved budge, (Lysons, 2006).

Visibility of spend, information and communication technology enables Centralized tracking of transactions enables full reporting on requisitions, items purchased, orders processes and payments made . Procurement staff can be released from processing orders and handling low value transactions to concentrate on strategic sourcing and improving supplier relationships, (Lysons, 2006).

Monitoring and controlling of the procurement process, ICT enables the organization to be in position to analyze the entire procurement process and be able to eliminate the procurement costs associated with the procurement system by creating Standardized approval processes and formal workflows ensure that the correct level of authorization is applied to each transaction and that spend is directed to draw off existing contracts. Compliance to policy is improved as users can quickly locate products and services from preferred suppliers and are unable to create maverick purchases, (Chaffey, 2006).

ICT enables an organization to be able to use e-receipting techniques in its payment systems which will enable an organization to eliminate over and under payment during the transactions The paperless receipt is becoming more commonplace in most retail companies across the globe as a cost sever and also in fighting against fraud involved in the payment of different suppliers retail; and that’s good for retailers, the environment and consumers. Some consumers can be wary of opening themselves up to digital promotions, so it’s up to retailers to allay those fears and present e-receipts as a customer benefit as well as a convenience, (Lysons, 2006).

Using ICT increases speed in the procurement process since request for proposal is easily obtained in the procurement systems in electronic request for proposal becomes so easy for an organization this therefore enables an organization in the fight against fraud since it’s able to reduce on the chances of fraud in the process of procurement especially at the stage of the request for proposal, (Chaffey, 2006).An adequate, fully integrated ICT system approach is needed for overall success. Additional programs provide the framework for the supplier databases and spend management as well as holding key vendor information and being an electronic repository for contracts. All these facilities cost money and a clear business case must be made for procurement efficiency. In most cases this is fairly clear that cost savings are possible, it pays for companies to spend money on information and communication technology, this investment will boost efficiency. The longer term reduction in costs will enable companies to direct their resources to more strategic initiatives.

Low staff remuneration, According to, (Rene Hansen et al, 2005), payment can influence fraud in several ways; Staff and external suppliers can be involved in this fraud when obtaining refunds for cancelled workshops, membership and subscriptions, or overpayment for services. Employees can design schemes whereby they duplicate payments to vendors and only deliver one cheque, converting the other to cash. This involves cheque forgery, altering payee amounts or creating duplicate or counterfeit cheques.

Chikanza et al, (2005) asserts that poor payment of employees leads to employee revenge against the organization due to being overlooked for advancement, overworked, in order for them to gain from other sources making them to act in fraudulent manner, leading to fraud.

According to Luway Mongie and Bowman Gilfillan (2009), civil society organizations, believe that they are activists who are not concerned about monetary gain. Employees of organization are engaged with changing the social status of human kind and empowering them with human rights education so that they make informed decisions and choices. With the current change in the economies and political dispensation of many countries, the cost of living is soaring and the risk associated with human rights activism is now too great so that staff feel the need for market related remuneration. Unfortunately most organizations in developing countries are unable to pay attractive salaries, particularly to local staff. Weakens the financial position of organization, as programs are abandoned midway and in some instances staff can go without salaries.

Influence of politicians, in procurement is to blame for procurement fraud in most organization, According to the Global integrity report 2008, it has been noted that although there are penalties, Procurement process especially big procurement contracts tend to involve high profile politicians, who influence the process & therefore usually protect the individuals who may be implicated. The regulations are in place but not effective due to the influence assumed by procurement personnel and how they manipulate the system to attain their own ends (IGG reports, 2010). According to report on the newspaper (Daily Monitor Monday 23 may 2011), Uganda revenue authority (URA) noted that the government is losing revenue as a result of organized crime between staff of the institution and officials of clearing and forwarding firms. Ms Sarah Kasheka.

Corruption, is one of the main proposed causes of procurement fraud, The government of Uganda in its National Strategy to fight corruption and rebuild ethics and integrity in Public Office (2004–2007) launched in July 2004, recognizes that corruption in public procurement and service delivery poses a serious obstacle to economic and social development in Uganda.

Limited procurement skills, amongst the procurement staffs, has led to fraud in most parts of the world , procurement profession is a relatively new profession unlike accountancy , medicine , law and so most parts of the world still lack qualified procurement profession , this limited skill has caused fraud in most institutions around the world, (lysons, 2006).

Ntayi (2005) has noted that procurement operations require experts to carry out public procurement at the private and public sector levels. The PPDA as the regulatory public procurement body should provide enough personnel to carry out the function.  Besides, there should be training to provide knowledge and skills of the scope and dynamics of public procurement as required by the (PPDA Act, 2003)

Weak punishment, given to culprits, is normally the reason why most of the culprits continue practicing fraud since the value of fraud is greater than the punishment to be given to the offenders, in Singapore and china the punishment to fraud criminals is normally by death penalty this helped Singapore eliminate corruption completely and china’s score in the scale of 1-10 also improved greatly (transparency international, 2006).

Weak laws by the government, is to blame for the rampant fraud , most government across African continent have weak laws governing procurement , since procurement department in most countries is seen as a new field so the government have not taken much responsibility in developing it. (Transparency international, 2006).

Lack of role models, Most of African leaders are corrupt and they have amassed a lot of wealth from corruption, therefore this has made even the organizational workers to be corrupt themselves.  According to (national fraud authority, 2004) billions of taxpayers’ money in African continent is lost in corruption.

Motives, According to Thembile et al, (2005), an employee may come under extreme financial stress, if she or he has health problems or family members are chronically ill. An employee may desire to solve a need or seek to attain a certain lifestyle. Possibly there may be gambling or alcohol-related problems. Unfortunately the manager cannot do much about such motives, but it is important that they are identified. Internal motives emanate from the workplace if an employee feels they are being underpaid, are unfairly treated in an appraisal interview, are given high volumes of work, leading to stress, and an employee perceiving that promotions are based on work politics and not performance, this may lead to fraudulent act.

According to Joseph R. Dervaes (2006), internal motives emanate from the workplace if an employee feels they are being underpaid, are unfairly treated in an appraisal interview, are given high volumes of work, leading to stress, and an employee perceiving that promotions are based on work politics and not performance, this may lead to fraudulent act.

Motivation and revenge, Motivation is another critical element. It includes financial need, challenge, and revenge. When the trusted employee has a financial need in their life, the motivation factor kicks in to permit the individual to perform an illegal act (Joseph R. Dervaes 2006).  Joseph R. Dervaes (2006) asserts that, the financial need can be either real or perceived (i.e.; greed). They become desperate and see no other alternative to solve their financial crisis. Sometimes this is the most visible element of change in a person’s life actually observed by fellow employees in the office. But, sometimes the individual commits fraud by exploiting the organization’s computers, accounting systems, and internal controls as a challenge. Breaking the organization’s codes and passwords is perceived as a game. The most dangerous person is one who seeks revenge against the organization. This wayward employee seeks to financially destroy the organization in retaliation for the poor treatment they’ve received in the past. Employees who have lost their jobs, been passed-over for promotions, or who did not receive a raise fall into this category.

Opportunity, According to Chikanza et al, (2005) Opportunity, and Motives are translated into action when there is an opportunity to commit fraud. If that opportunity is not there, temptation is removed. Opportunity can present itself if a cheque book is kept in an unlocked office drawer, or a manager travels often and signs blank cheques for activities or purchases whose actual amounts are not yet available. This presents a great opportunity for the staff to tamper with the cheque book or the signed cheques. A manager can establish “opportunity” through studying the organization and searching for weaknesses. An employee can omit a procedure once, and on realizing that no one has noticed, can skip the procedure in future, which can be used by colleagues to commit fraud. Other examples of “opportunity” include someone working for an organization with weak controls, such as only requiring one signature on a check, those who use an organization’s credit card but also approve all credit card purchase. All these prevail opportunities for fraudulent act.

2.4 THE VARIOUS ICT SYSTEMS INSTALLED TO DETECT PROCUREMENT FRAUD AT NSSF

The information and communication technology has been adopted in organizations in the following ways. Electronic Fund Transfer (EFT) EFT is based non-electronic transmission of receipts and payments between banks and their customers or the purchasers and suppliers, (Farrington et al, 2006). It enables paperless payments to be made to suppliers “here money travels not paper”.  EFT involves automated digital transmission of money between organizations and banks. The buying organization will make payment to the supplier using EFT, in a more convenient and accurate. ( Lysons et al, 2006).

Electronic Fund Transfer (EFT), is associated with the following advantages; Reduction of costs due to elimination of cheque writing receipt canceling, Increased speed of fund transmission. This is fast, accurate and safe. (Chaffey, 2006).

Electronic Mail (e-mail) E-mail is a process by which letters, orders or other documents are sent by a computer along telecommunication lines to appear on the Visual Display Unit (VDU) at their destination. They emphasize that incase buyers use this technique in the process of buying, sending and receiving of messages can take minutes instead of days. (Leanders et-al, 1998).

E-mail is categorized into two categorizes e-mail broadly into in-bound and outbound. Inbound e-mail is received from outside the organization such as from suppliers. Outbound email is sent from the organization to another an example is from the buyer to the supplier, email reduces on costs associated with movement thus resulting to efficiency on procurement activities. (Kennedy ,2000),

Electronic Data Interchange (EDI) EDI is a technique based on agreed standards, which enables computers in different organizations to successfully send business information of transaction from one to another. They emphasize that EDI reduces on the lead-time simply because transactions are faster and more accurate (Lysons et al, 2006).

EDI involves business transactions like, placing orders, invoices, delivery and payment transactions. EDI works according to standards implying that the organizations using it have to agree on the systems and the software that they are to use (Chaffey, 2007).

EDI. Works as follows, (Sollish et-al 2007); Company A sets a purchase order using its internal business software

1. EDI software transforms the order from the internal format to a standard 850-purchase order document format.
2. Company A sends the 850 standard purchase orders to company B over a third party value added network.
3. Company B receives 850 purchase order document and will translate it from EDI to its proprietary format.

Typically, company A will send an acknowledgement to company B According to (Clarke ,1998), EDI will replace paper based purchase order with electronic one and sites the following as advantages that are associated with the use of EDI in reducing procurement fraud. Reduction of paper work, reduced errors, Reduction of inventory levels, Supports just in time (JIT) inventory policies, Facilitates global purchasing, and Promotes long term buyer supplier relationships.

Smart Cards. Smart cards are integrated circuit chips used to store customer specific information including electronic money. They have ability to provide intelligence and store significant amount of information of up to 20 pages of text.  Smart cards will be used to purchase goods or services, store information, and above all, they can be availed to all potential users, (Enslow, 2006)

Smart cards have numerous benefits and this includes;

1. They provide confidentiality and security of information
2. They are economical and thus reduce on the handling fraud.
3. They offer convenience since they are of the same size like credit cards. They store reasonable amount of information and thus will be easier to be accessed by the organization for use at any time. Smart cards provide effective and efficient means of storage and compatibility, especially with EDI, which facilitates easy movement and exchange of information, (Farrington et al, 2006)

Electronic Hubs (E-hubs)

This device connects several networks together. As used in e-business it means a central repository exchange such as the star network. In the network, a server is a control computer that holds database and programs and programs for many computers (Thompson et al, 2005).

Using electronic hubs the  buyers PCs will be connected together with the suppliers PCs and information regarding business transactions will be conducted, since all the information is kept in the server computer.(Herper et al, 2005),

E-Market place E-Market is a web site that enables procurement officers to select the best suppliers in the market electronically. In this situation, a procurer is in control especially in open market places. This enables procurer to evaluate all potential suppliers for a particular product or service and make informed buying decisions regarding what and where to buy, (Lysons et al, 2006).

E-Market is applicable where; the market is large enough, product specification and information are subject to rapid changes, suppliers have difficulties in comparing similar products from different vendors, the cost of locating, appraising and evaluating suppliers is high. (Chaffey, 2007),

Electronic- catalogs E-catalogs are web pages that provide information on products and services offered and sold by the vendors and they mainly include; sell side catalogs; buy side catalogs and third party catalogs, E-catalogs support online transactions especially ordering and payment capabilities (Farrington et al, 2006).

E-Catalogs, reduces procurement fraud by providing easy communication and the real product in the market. (Accenture (2006),

The advantages of e-catalogs includes; facilitation of real time communication between buyers and sellers; Allows room for the development of closer buyer-supplier relationship due to improved vendor services. Enables suppliers, respond quickly to market conditions by adjusting   repackaging (Lysons, 2006).

Material Requirement Planning (MRP) MRP processes involve forecasting demand for individual parts so that they will be ordered in advance of receiving actual customer orders. This complex process is generally handled by computer software program through decision support models, using calculated algorithms to predict future requirements (Sollish, et-al, 2007).

According to Chaffey (2007),   MRP system helps to reduce procurement fraud in a number of ways which include; Assists in forecasting demand about the future among others, the level of stock kept is reduced and this reduces on the costs associated with holding stock and missing of items in the inventory, Proper planning on when to order and receive goods. On the other hand however other ICT systems installed to detect procurement irregularities at NSSF include;

Installation of cameras for easy survey and monitoring of the organization.

Use of hub systems like the one used in the invoicing, mailing among others.

2.5 THE CHALLENGES OF ADOPTING ICT SYSTEM TO PREVENT PROCUREMENT FRAUD

Creation of Unemployment, Crake Richard, (1998) emphasized that while information and communication technology may have streamlined the business process, it will also create job redundancies, downsizing and outsourcing. This means that many lower and middle level jobs will be done away with, causing more people to become unemployed.

Limiting Privacy of the organization, Simon Harper & Lora Thompson (2007) assert that though information and communication technology may make communication quicker, easier and more convenient, it will also bring along privacy issues. From cell phone signal interceptions to e-mail hacking, people are now worried about their once private information becoming public knowledge.

Lack of job security, Industry experts believe that the internet will make job security a big issue, since technology keeps on changing with each day. This means that one has to be in a constant learning mode, if he or she wishes for their job to be secure (Crake Richard, 1998).

Information and communication technology may make the world a global village, it will also contribute to one culture dominating another weaker one. For example, it is now argued that US influences how most young teenagers all over the world now act, dress and behave. Languages too have become overshadowed, with English becoming the primary mode of communication for business and everything else (Chaffey, 2007).

Conflict of interest, Hansen et al, (2005) noted that during Purchasing. An employee might not disclose a conflict of interest concerning a certain service provider. For example, the employee might award a contract to a relative’s company. This hidden interest is not in the interests of the organization. An employee might receive kickbacks from suppliers in exchange for approval to either order from or make a payment to them, when goods have not been fully supplied or are charged at a higher price. They added that Staff from the donor organization can be bribed by an entity manager, so that during the monitoring process some instances of non-compliance are ignored.

Lack of job security, in some countries working for an organization is an admirable and attractive occupation, but in others it is no longer as gratifying as it used to be. There are a number of reasons for this, ranging from restrictive legislation targeted at organization, single party autocratic government, donor fatigue and the presence of civil strife. Most employees working in such environments are tempted to engage in fraudulent activities, as they cannot make personal plans beyond the next two years at most. Most organizations operating in difficult environments have strategic plans ranging from six months to a year, and so the staff contracts may vary with the organization’s planning strategies. Organizations generally employ younger people who may be starting families, or who have young families, and need financial security, (Daveas, 2006).

Rationalization, According to Chikanza et al, (2005) Rationalization also leads to fraud. An employee may commit fraud but still invent a rational explanation as to why the fraud has been committed. This “rationalization factor” encourages the perpetrator to continue committing the fraud. These are some ways in which individuals may rationalize their actions:-  “Some people do it, so why should I not do it too.” “I will pay back the organization later or I will stop soon since this is only temporary.” “I get so little, but I work so hard, this organization owes Me.” leading to fraudulent acts in the organization

Poor record keeping, This is to blame for most of procurement fraud in the developing countries, maintaining a proper records of providers is vital and when organizations do not maintain a record of their providers they are prone to fraud (Farrington et al, 2006).Procurement officers should be encouraged to maintain proper record keeping and management to provide bases for tracking fraudulent procurement and procurement entities should provide conducive environment that should be supported by trained skilled and professional experts. The reports add that non-compliant officials should be prosecuted in courts of law. (PAC Reports, 2009-10).

2.7 Conclusion

The chapter reveals the views of scholars on the causes of procurement irregularities, the various ICT systems installed to detect procurement irregularities at NSSF, effects of ICT systems adoption on detection of procurement irregularities, ways of minimizing procurement irregularities using ICT systems at NSSF,

The literature shows that procurement is caused by conflict of interest, lack of job security, poor record keeping, low staff remuneration, influence of politicians in procurement process, limited procurement skills, weak punishment to the culprits, lack of role models among many others, the literature widely highlighted on the various ICT systems installed to detect procurement irregularities at NSSF, effects of ICT systems adoption on detection of procurement irregularities.

In spite of the knowledge and presence of actors, however, the literature does not address the specifics of institutions like NSSF, there by presenting a knowledge gap to be filled by this study.

CHAPTER THREE

RESEARCH METHODOLOGY

3.0 Introduction

This chapter presents the methodology which consists of the research design, area of study, study population, sample population and selection, sampling technique, data collection method, data quality control, data collection procedures , data analysis and presentation and limitations of the study.

3.1 Research design

Qualitative and quantitative research designs will be used. The researcher will use the above methods because many aspects will be covered in the study concerning the impact of information and communication technology on procurement fraud at NSSF given the complex nature of NSSF, qualitative research method will be used because it collects information within a short time while quantitative will be used through interview to cross check what has been given.

3.1.1 Qualitative approach: this approach gathers information based on an in depth understanding of human behavior and the resources that govern the behavior depending on the why and how. This will be used because it deals with smaller population and it puts emphasis on uncovering more about people’s experiences.

3.1.2 Quantitative approach: this is the approach that deals with numerical expression in figures in terms of quantity which involves measurement of quantity and amounts.

However quantitative approach will be used because of the following reasons; this approach eliminates behavioral biases were by the behavioral beliefs are done away with, the approach leads to accuracy were by results are not guessed, operational risks are reduced. This approach will be used in away of getting actual figures and taking on calculations then getting answers.

3.2 Area of the study

The study will be carried out at National Social Security Fund head quarters located at Plot 95 Kampala road.

3.3 Study population and sample size

The study will target National Social Security Fund evaluation committee members, contracts committee members, procurement staff, and accountants of National Social Security Fund.

According to NSSF records 2015 , NSSF head office has a total of 120 employees

The study will use solvin’s formula

It is computed as n = N / (1+Ne2).

whereas:

n = no. of samples

N = total population

e = error margin / margin of error

NSSF has 120 employees using solvin’s formula,

n=       120/(1+120(0.05)²

n =      120/1.3

n  =92

There researcher will therefore choose a total of 92 employees.

3.4 Sampling Technique, sampling procedure and sample size

According to (Amin, 2005) sampling involves selecting a sample of the population in such a way that samples of the same size have equal chances of being selected.

The study sample will comprise of 92 respondents who will include evaluation committee members, contracts committee members, procurement staff, accountants.

While carrying out research, purposive sampling will be applied to the above different categories of respondents.

3.4.1 Sampling Technique

The study will use purposive sampling technique to select respondents in the different departments.

A purposive sample is a non-probability sample that is selected based on characteristics of a population and the objective of the study; Purposive sampling is also known as judgmental, selective, or subjective sampling, (Amin, 2005).

This technique will be chosen because it is cheap and the population under the study is not very big.

3.4.2 Sampling procedure

The researcher will seek permission with staff and when allowed, to proceed with research, questionnaires will be issued and interviews will be carried out with the selected staff. Documentary evidence from both primary and secondary sources of data will be considered; taking account of what is reported regarding Impact of information and communication technology adoption on prevention of procurement fraud.

3.4.3 Sample size and composition

Source: primary data

3. 5 Data Sources

Source of data will be from both primary and secondary sources.

• Primary data

Primary data will be obtained from the questionnaires administered on the target respondents to gain opinions and practices on impacts of Information and Communication Technology on procurement fraud at NSSF.

• Secondary sources

Secondary data is data which has been collected by individuals or agencies for purposes other than those of a particular research study. It is data developed for some purpose other than for helping to solve the research problem at hand (Bell, 1997). This will comprise of literature related to impacts of information and communication technology on procurement fraud in relation to the case study. Secondary data will be sourced because it yields more accurate information than obtained through primary data, and it is also cheaper.

3.6 Data Collection Instruments/methods

The major instruments for data collection will be questionnaires and interview guide. Surveys will be part of a complete data collection and evaluation strategy. The major method of data collection for the study will be survey, which is done using selected instruments like questionnaires. The questionnaire will be provided to respondents with ample time to comprehend the questions raised and hence, they will able to answer factually.

3.6.1 Questionnaires

Questionnaire will be used to collect quantitative data. The researcher will administer the questionnaires to all the respondents, which will be designed basing on study objectives and questions. Respondents who can read and write will fill in the questionnaires themselves. The questionnaires will be close ended.

3.6.2 Interviews

Qualitative data will be collected from the informants using interviews. The interview guide will be structured. The interviews will be held with procurement staffs and accountants, and will take approximately thirty to sixty minutes. This will be used since it’s the best tool for getting first-hand information /views, perceptions, feelings and attitudes of respondents. Both formal and informal interviews will be used to get maximum information from the different respondents to participate in the research.

3.7 Data quality control

3.7.1 Validity

To establish the validity of the questions, pre-testing will be done amongst the selected categories of respondents. Their comment will be incorporated in the final instruments to suit the data requirement of the study. The final amended research instrument will be reviewed jointly by the researcher and the supervisor.

3.7.2 Reliability

Reliability will be checked using the test –retest practice advocated for by Amin(2005). In other words, the questions will be put to course mates and their comments noted, they will then be presented to the respondents and their views will be compared with those of the course mates. On receipt of the questionnaires, manual editing will be done, followed by coding. Frequency count of different variables will be done and this will give the number of occurrences and percentages out of total occurrences.

3.8 Data collection procedures

Upon receiving the University permission to carry out research the researcher will visit National social security fund will letter from Kyambogo University.

The researcher will seek permission from staff and once allowed to proceed with research, questionnaires will be issued and an interview will be carried out with the selected staff.

3.9 Data processing and analysis

The raw data will be coded, edited, and arranged ready for analyzing only completed raw data will be analyzed using statistical tables and graphs generated from micro soft excel to help in analyzing data.

3.10 Limitations of the study

Financial constraint, this is in terms of financial support for transport, printing questionnaires among other requirements that require finance. However this shall be overcome by soliciting money from friends, relatives and sponsors which will assist in making my work a success.

Respondents may delay in filling the questionnaire and fear to give information, but they will be persuaded that the information will be kept secret.

QUESTIONNAIRE

TOPIC: IMPACT OF INFORMATION AND COMMUNICATION TECHNOLOGY ON PROCUREMENT FRAUD

A CASE STUDY: NSSF

Dear respondent

I am Koch Madut Koch, am a student of Kyambogo University carrying out a study on the above stated topic and pursuing a bachelor’s degree in procurement and logistics management. You are one of the respondents randomly selected to participate in the study. The information given shall be treated with at most confidentiality and shall only be used strictly for academic purpose.

SECTION A:             GENERAL DATA

• Which department do you belong to in this organization?

Evaluation Committee                             ICT Department           Accountant

Contracts Committee

Procurement Staff

• Sex: Male                    female

• Age a) 18 -29 b) 30 – 39 c)  40 and above

• Educational level

Masters                                   Diploma                      Degree             Others

5. For how long have you been working with NSSF group of companies?

3-5 years                                                    6-10 years

10 above years

• Do you have any knowledge about procurement fraud irregularities in NSSF

Yes                                                            No

7. Have you heard of some cases of Procurement Fraud in NSSF?

Yes                                                      No

8 How is procurement irregularities manifested at NSSF?

Embezzlement                        Favoritism                               Bribery

8. Has there been a history a history of procurement detection Fraud at NSSF?

Yes                                                      No

 SECTION B: The effects of ICT systems adoption on prevention of procurement fraud

Key: SA= strongly agree, A=agree, N=neutral, D=disagree, SD=strongly disagree

Please mention other effects of ICT systems adoption on detection of procurement fraud.

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….……………

 SECTION C: the various ICT systems installed to detect such procurement fraud at NSSF

Key: SA= strongly agree, A=agree, N=neutral, D=disagree, SD=strongly disagree

Please mention other ICT systems used to procurement fraud.

………………………………………………………………………………………………………………………………………………………………………………………………………………………………

…………………………………………………………………………

SECTION D: The challenges of adopting ICT system to prevent procurement fraud

Key: SA=strongly agree, A=agree, N=neutral, D=disagree, SD=strongly disagree

Tick in the box where appropriate.

Please mention other challenges of procurement fraud reported.

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….