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2.1 INTRODUCTION

This chapter discusses what various scholars have written about the impact of information and communication technology on procurement fraud. It mainly covered the concepts of information and communication technology, the relationship between information and communication technology and procurement fraud, ICT techniques used to reduce procurement fraud and the other factors that can reduce procurement fraud apart from ICT.

2.2. Definitions and concepts of ICT and procurement fraud

2.2.1 Definitions of information and communication technology

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.

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).

2.2.3 Concepts of information and communication technology on procurement fraud.

Information and communication technology is a very important asset to any organization today, since it is a major driver in cost reduction, through the time saved in searching for suppliers, placing orders and the less number of participants involved (Chaffey, 2007).

2.3. Advantages of information and communication technology

Marasco (1992) asserts that, information will only be meaningful to an organization in case it is; Accurate thus free from errors, complete, simple to understand by all the participants, economic where resources are utilized properly, relevant

2.3.1. Globalization

According to Marasco (1992), ICT has not only brought the world closer together, but it will allow the world’s economy to become a single interdependent system. This means that we will not only share information quickly and efficiently, but we will also bring down barriers of linguistic and geographic boundaries. The world will developed into a global village due to the help of information and communication technology, allowing countries like Chile and Japan who are not only separated by distance but also by language to share ideas and information with each other.

2.3.2. Communication

Chaffey (2007) asserts that with the help of information and communication technology, communication become cheaper, quicker, and more efficient. We can now communicate with anyone around the globe by simply text messaging them, or sending them an email, for an almost instantaneous response. The internet has also opened up face-to-face direct communication from different parts of the world, thanks to the help of video-conferencing.

2.3.3. Cost effectiveness

According to Crake Richard (1998), information and communication technology helps to computerize the business process, thus streamlining businesses to make them extremely cost effective money-making machines. This, in turn, increases productivity, which ultimately gives rise to profits; that means better pay and less strenuous working conditions.

2.3.4. Bridging the cultural gap

Cortesao L., Martins F., Rosa A., Carvallio P. (2005) argues that information and communication technology helps to bridge the cultural gap by helping people from different cultures to communicate with one another, and allow for the exchange of views and ideas, thus increasing awareness and reducing prejudice.

2.3.5. More time

ICT makes it possible for businesses to be open 24 x7 all over the globe. This means that a business will be open anytime, anywhere, making purchases from different countries easier and more convenient. It also means that you will have your goods delivered right to your doorstep without having to move a single muscle (Kennedy A, 2001).

2.3.6. Creation of new jobs

Kennedy A, (2001) argues that probably, the best advantage of information and communication technology is the creation of new and interesting jobs. Computer programmers, Systems analyzers, Hardware and Software developers and Web designers are just some of the many new employment opportunities created with the help of ICT.

2.4. Disadvantages of information and communication technology.

2.4.1. 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.

2.4.2. Privacy

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.

2.4.3. 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).

2.4.4. Dominant culture

While 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.

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Chaffey (2007) identifies the following as disadvantages of information and communication technology;

Information and communication technology normally requires the use of machines like computers that rely on electricity, hence will limit their reliability
Information and communication technology requires a capital making it expensive especially in terms of buying computers, maintaining and updating the system.
Information and communication technology may also result into health problems like finger and eyesight disorders among others.

From the above information and communication technology benefits the organization by reducing on the routine activities at the same time it requires huge investment on purchasing machines, maintenance and training off staff

2.5. Definition of procurement fraud

Procurement fraud is a dishonestly obtaining an advantage avoiding an obligation or causing a loss to the organization these are like bribery, theft, embezzlement, false claims and many others (Farrington,2006).

Procurement fraud is any fraud relating to a company purchasing services, goods or commissioning construction projects from third party suppliers. Fraud happens when there is cost/labour mischarging, defective pricing, defective parts, price fixing, bid rigging or if the tender process has not been followed correctly. It can also include payment for goods or services that were not delivered, or if they are of substandard quality or have been substituted.

According to Norman Katz (1996), 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.

Forms or types of procurement fraud

According to Kenneth Lysons and Farrington 2006 the following are the types of procurement fraud.

This is the form of procurement fraud where soliciting something of value for purpose of influencing the action of an official in the discharge of the public or legal duty.
Bid rigging, this is the form of procurement fraud were collusion among competitors to artificially increase the prices of goods, services to be offered in bids to potential customers.
Embezzlement this is the stealing of money for one’s use by individuals
False claims this is the filling false claims against the original such that one get something for personal gains.
Defective pricing and product substitution this is the deliberately changing of the charges rates or cost to customers which exceeds the contractual terms.

According Michael Levi, John Burrows, Mathew H. Fleming and Mathew Hopkins Procurement fraud includes; price-fixing rings, abuse of inside information in the construction of tenders or in their application.

Rene Hansen, Thembile Phute, Killron Dembe and Synodia Chikanza (2005) assert that there are internal and external fraud;

Internal fraud is when employees in an organization are involved in fraudulent activities such as:- Asset misappropriation, Revenue and cash receipt collection, Payroll and employee, Stealing time from Employer

External fraud is when people outside the organization are involved in the abuse of assets and resources of the organization such as Fraudulent reporting on funds used, Non-delivery of services, fraudulent application for grant funds, Inflationary Prices, Procurement Fraud.

While Rene Hansen, Thembile Phute, Killron Dembe and Synodia Chikanza (2005) consider only internal and external fraud, Norman Katz (1996) adds on mixed frauds on top of internal and external frauds. Norman Katz (1996) asserts that mixed frauds involve collusion between an external entity (i.e. customer, supplier) and one or more internal persons (i.e. full-time employee, contract employee, consultant, etc.).

2.6. Information and communication technology techniques used to reduce procurement fraud

According to James Marasco (2010), procurement fraud extends across various industries, and the types vary in sophistication. It arises from contract management and the outsourcing of goods and services. Identifying the risks of procurement fraud will safeguard the organization from falling victim.

Different scholars considers the following as one of the Information and communication technology techniques used to reduce procurement fraud;

2.6.1 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 and Farrington, 2006).

According to Chaffey (2007), 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 soft ware that they are to use (Chaffey, 2007).

Chaffey (2007) identifies that EDI approach is associated with Electronic Point of Sale (EPOS) he cites an example in a supermarkets, when a product is purchased the check out operator scans the bar code on the label and automatically registers the price on the cash. In the same way in case of stock replenishment, the machine can order automatically as the stock reaches the re order level.

According to Sollish et-al 2007, shows that EDI. Works as follows;

Company A sets a purchase order using its internal business software
EDI soft ware transforms the order from the internal format to a standard 850-purchase order document format.
Company A sends the 850 standard purchase orders to company B over a third party value added network.
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.
Promotes long term buyer supplier relationships.

2.6.2. Electronic Fund Transfer (EFT)

According to Lysons and Farrington (2006), EFT is based non-electronic transmission of receipts and payments between banks and their customers or the purchasers and suppliers. 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. Lysons and Farrington (2006) state that the buying organization will make payment to the supplier using EFT, in a more convenient and accurate way.

According to Chaffey (2007), 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.

However, it is also associated with some disadvantages like; Difficulty to implement especially where purchasers and suppliers may prefer to make and receive payments by cheque. It may cause problems especially with digital signatures.

2.6.4. 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)

According to Chaffey (2007), e-mail will be based on sending and receiving of electronic messages, he states that e-mail will be available in the internet for over 20 years.

Chaffey (2007) emphasizes that the recent innovation is the use of websites, which provide free e-mail facilities, and does not require any software other than the web browser.

Kennedy (2000), describes internet based on e-mail and stresses that the internet messages are sent through e-mail and thus gives examples like;

Hot mail (www. hot mail.Com)
Yahoo mail! (www.yahoo.com)

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

2.6.5 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. (Lysons 2006)

The following are the benefits of using smart cards;

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.
They are economical and thus reduce on the handling fraud.
They provide confidentiality and security of information

According to Enslow (2006), smart cards provide effective and efficient means of storage and compatibility, especially with EDI, which facilitates easy movement and exchange of information. The global use of smart cards will depend on the introduction of global payment standards that are currently being developed.

2.6.6. 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 (Herper and Thompson 2005).

According to Herper and Thompson (2005), 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.

2.6.7. E-Market place

Lysons (2006) asserts that, 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. This brings efficiency in procurement since the best-evaluated bidders will be given contracts to supply.

According to Chaffey (2007), 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.

2.6.8. Electronic- catalogs

E-catalogs are web pages that provide information on products and services offered and sold by the vendors. (Lysons 2006)

According to Lysons (2006), e-catalogs mainly include; sell side catalogs; buy side catalogs and third party catalogs, E-catalogs support online transactions especially ordering and payment capabilities.

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).

According to Accenture (2006), e-catalogs, reduces procurement fraud by providing easy communication and the real product in the market.

2.6.9. Material Requirement Planning (MRP)

MRP systems are primarily used to determine when to place orders for standard materials, so that they will arrive exactly when needed this helps in reducing the level of inventory held and theft in inventory (Sollish, et-al 2007)

According to Sollish, et-al (2007), 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 soft ware program through decision support models, using calculated algorithms to predict future requirements

According to Chaffey (2007), MRP reduces procurement fraud in the following ways;

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.
Assists in forecasting demand about the future among others.

From the above, information and communication technology techniques that companies employ in the reducing procurement fraud, internet is seen as the most important one since it helps organizations to interact with their suppliers in the shortest time, with no errors and above all at lower costs. This helps in cost reduction and proper customer satisfaction through achievement of the five rights related to procurement.

2.7. The impact of ICT on procurement fraud in the sourcing process

Ernst and Young (2000) assert that, Information 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. According to Ernst and Young (2000), 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.

The rapid development of Worldwide Web (WWW) technologies, Internet, and Information and Communication Technology (ICT) have generated the evolutionary on-line business solution and electronic-commerce (ecommerce) both of which are to provide support for both information and workflow control, and process management as well as enhance the communication. E-commerce technologies are perceived as a mainstream to improve productivity and information flow and communications (Osmonbekov T., Bello D. and Gilliland D., 2002).

According to Jakubowski, Broce, Stone, and Conner (2002), communication and training significantly contributes to reducing fraud within the organization. Procurement and Accounts Payable Employees, as well as Vendors need to be put on notice and educated as to what constitutes a violation of the Organization’s Code of Ethics. The Organization must provide for a method of reporting suspicious activity.

Jakubowski, Broce, Stone, and Conner (2002) assert that, fraud awareness training is a positive experience that educates employees on the Organization’s Ethics and Fraud Policies, while stressing that fraud is both costly and detrimental to the Organization. Through this training, employees become aware of the Red Flags to look for of fraudulent activities and their reporting responsibilities.

Australian National Training Authority (1999) asserts that through communication accounts Payable personnel are trained on what to look for in processing invoices, controls that are crucial to their department, Red Flags of procurement fraud, and how to report suspicious activities within the Organization.

According to Australian National Training Authority (1999), Procurement personnel are trained on what to look for in selecting vendors and processing purchase orders, controls that are crucial to their department, Red Flags of procurement fraud, and how to report suspicious activities within the Organization. Australian National Training Authority (1999) stressed that this can be made easier through use of information and communication technologies.

According to UNESCO (2002), ICT offers concrete opportunities for local and national governments to improve their performance in terms of transparency, participation and decentralization. By narrowing the constraints of geographical isolation or insufficient time, ICT has the potential to invigorate business relations, allowing citizen participation in organizations activities.

UNESCO (2002) asserts that the integration of ICT in business processes has the primary objective of transforming the relations between organization and the public, its customers and suppliers by improving the transparency, efficiency and accountability of organization by allowing the public to become active stakeholders in business making process.

According to Rene Hansen Thembile Phute, Killron Dembe, and Synodia Chikanza (2005) argues the through use of ICT password have been developed that prevent access to certain software applications. This is done through having a general windows password reinforced by passwords in the Pastel or Pay plus program; these two programs maintain the financial records of a Entity and information about the employees salaries and particulars. The password helps to

prevent some intruders into the company information and therefore minimizing frauds

2.8. Causes of procurement related fraud in the organization

Rene Hansen, Thembile Phute, Killron Dembe, Synodia Chikanza (2005), Fraud as an aspect of corruption normally happens in organizations where the governance structures are weak or have become corrupted themselves. This is a worldwide trend, which cuts across all sectors.

James Marasco (2010) asserts that, procurement fraud can take a number of forms, from the formation of a cartel to the falsification of invoices. Most commonly, an employee responsible for procurement might receive bribes or incentives from a supplier designed to encourage them to favour that supplier.

According to National fraud authority (2011), procurement fraud is a complex problem. It covers a wide range of illegal activities from bid rigging during the pre-contract award phase through to false invoicing in the post-contract award phase. It can be perpetrated by those inside and outside an organisation. Procurement fraud is difficult to detect; cases are rarely reported and subsequently it is difficult to measure the extent of the problem. Where fraud is detected, resource is generally channeled into investigation and prosecution which is expensive and rarely ends in a conviction or the recovery of losses.

2.8.1. Low staff remuneration

According to Rene Hansen Thembile Phute, Killron Dembe, and Synodia Chikanza (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.

Rene Hansen Thembile Phute, Killron Dembe, and Synodia Chikanza (2005) assert 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 organisations, 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 programmes are abandoned midway and in some instances staff can go without salaries.

2.8.2. Intent

This is what distinguishes fraud from error or oversight in the accounting and financial reporting processes. The perpetrator would have thought about it and acted. The legal system also procedurally would want to establish intent during the trial in order not to convict an innocent person.

2.8.3. Motives

According to Rene Hansen Thembile Phute, Killron Dembe, and Synodia Chikanza (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

2.8.4. 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.

2.8.5. Opportunity

According to Rene Hansen Thembile Phute, Killron Dembe, and Synodia Chikanza (2005) Opportunity, 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

Rene Hansen Thembile Phute, Killron Dembe, and Synodia Chikanza (2005) reveals that entities where there are benefits for payment of schools fees for dependants, access to fuel coupons, air fare and travel schemes, some staff members may overstate the number of children they have. Fuel coupons could be used by employees for other people’s cars making the organization to loose the resources due to such fraudulent act.

2.8.6. External and internal pressure

According to Norman Katz (1996), External pressures beyond our control, such as the healthcare costs of sick parents or children, daycare expenses etc lead to fraud. He added that Pressures we may not be able to control, such as gambling and drug addictions also contribute to fraud.

Norman Katz (1996) asserts that, the internal pressures that build within the organization to either increase performance or decrease task times. This is typically the result of management pressures to cut costs without providing the necessary tools to achieve the new performance goals, or due to the establishment of unrealistic benchmarks. For example, if the manufacturing department is pushed to produce more without any increase in staffing or machinery, at some point supply chain fraud is likely to occur, whether the fraud is the falsification of production output or the production of inferior quality goods. And while the manufacturing department will be held to blame for the failure to produce first-quality goods, it is really the fault of management. The manufacturing employees, out of fear of losing their jobs, may have reverted from flight, opting to perpetrate fraud rather than lose their jobs. Fear becomes the motivation to perpetrate fraud, with the sole intent of retaining employment.

2.8.7. Needs

According to Auditor of State Dave Yost Need is one of the things which influence employees who choose to commit fraud. He defined need, as an incentive or pressure, arises from personal circumstances, including lifestyle habits and personal debts. Joseph R. Dervaes (2006) argues that most often, need stems from something an individual is currently experiencing, although it can extend out to problems of close family members or friends. In these cases, individuals commit fraud because they feel like they “have to” in order to ease the problem, whether it is real or perceived. Examples include: Someone who is late on a payment, such as a mortgage or credit card bill. Those who feel they “need” a luxury car or a vacation home.

2.8.8. Morals

Norman Katz (1996) also considers lack of good morals and values being imprinted upon a person by the social groups, especially beginning at a young age as one of the factors that influences the level of fraud that a person commits. This is because the person was trained from child hood and groomed with bad morals.

Norman Katz (1996) added that The Western culture that emphasizes material goods in association with social status, where we are forced to keep up with the Joneses influences people into fraud.

According to daily monitor newspaper (Monday 23 may 2011) greediness of individuals lead to fraudulent act. The media reported that example Uganda revenue authority (URA) partners are greedy and they bribe URA staff so that they can have their goods cleared without paying taxes. It also added that Alliance between the employees and the clients of the organization (URA) resulted into the government losing revenue as a result of organized crime between staff of the institution and officials of clearing and forwarding firms.

2.8.9. Rationalisation

According to Rene Hansen Thembile Phute, Killron Dembe, and Synodia Chikanza (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 organisation 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.

2.8.10. Conflict of interest

Rene Hansen Thembile Phute, Killron Dembe, and Synodia Chikanza (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.

2.8.11. Lack of job security

Joseph R. Dervaes (2006) asserts that, 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 organisation’s planning strategies. Organizations generally employ younger people who may be starting families, or who have young families, and need financial security.