Methods of Detecting Supply Chain Fraud


The detection of supply chain fraud encompasses a variety of techniques and methodologies, processes and procedures, and relies on the availability of accurate data in electronic form. It is no longer possible to sift through mountains of paperwork in hopes of manually catching inconsistencies, though this is not to say that a document review would never be in order. Rather, it is necessary to employ analytical programs that can review the increasing volume of information on a timely basis and report anomalies to be reviewed further both programmatically and manually.

To accomplish this requires the movement away from paper-based operations. Readily available and reliable technologies, from barcode applications to Electronic Data Interchange (EDI) are cost-competitive and easily integrated to many Enterprise Resource Planning systems, which are typically the electronic heart-and-soul of an organization’s operations.

A primary goal is to close the data gaps – places where paperwork exists and data may not well validated for accuracy and integrity. As the data begins to flow smoothly between these previously manual points, the information can be used to validate other transactions and catch anomalies or fraud.

1 = Purchase Order

2 = Shipment


4 = Receipt

5 = Quality Assurance

6 = Invoice

Other articles in this series:

An Introduction to Supply Chain Fraud

Supply Chain Fraud and Sarbanes-Oxley

COSO – Sarbanes-Oxley and Supply Chain Fraud

Definition of Supply Chain

Definition of Fraud

Who’s Involved in Supply Chain Fraud?

What Are the Causes of Supply Chain Fraud?

Where Does Supply Chain Fraud Happen?

Assessing the Impacts of Supply Chain Fraud

Dreaded Shrinkage: Bottomless Pit or Grave?

Importance of Internal Assessments Before SOX Audits

Budgeting For the Repercussions of Supply Chain Fraud

Summarizing Challenges Surrounding Supply Chain Fraud

Guest Author: Norman Katz

Copyright © Katzscan, Inc. – Source: Supply Chain Fraud White Paper

Telephone: 954-942-4141   Since January 1996 

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