Sam Mpundu has over 8 years of experience in finance roles and currently serves as the Group Chief Financial Officer of Earthrow Finance Limited. He holds several professional qualifications including an MBA from Oxford Brookes University and certifications in accounting, fraud examination, and financial reporting. Additionally, he is pursuing a doctoral degree from the University of Pretoria.

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Profile
Sam Mpundu is a professionally qualified chartered accountant
(ACCA) and holds a Masters of Business Administration (MBA)
degree from Oxford Brookes University (UK). He is a certified fraud
examiner (CFE) having been chartered by the Association of
Certified Fraud Examiners (ACFE) as an associate member. He also
holds auxiliary qualifications such as the Post Graduate Diploma in
International Financial Reporting (DipIFR) and Govern Grants
Management Certification. Currently, he is undertaking his
doctoral studies (DBA) with the University of Pretoria.
Sam has more than 8 years work experience in the industry holding several positions
which include Deputy Director – Finance & Risk, Finance Manager, Senior Accountant
and Management Accountant. Sam is currently engaged as Group Chief Financial
Officer with Earthrow Finance Limited where he is responsible for Business
Development and Financial Strategy.

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“….all multifarious means which human ingenuity can devise, and
which are resorted to by one individual to get an advantage over
another by false suggestions or suppression of the truth. It includes
all surprise, trick, cunning or dissembling, and any unfair way by
which another is cheated.”
What Is Fraud?

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Pressure (Motivation)
Perceived non-sharable financial need
Opportunity
Access to resources
Rationalization
Justification of the act
The Fraud Triangle
The Fraud Triangle is model for explaining the factors that cause someone
to commit occupational fraud. It consists of three components which
according to Donald Cressey must be present at the same time for an
ordinary person to commit fraud

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- Attitude towards
internal controls
- Risk of management
override
- Skills of employees
- Organization culture
- Clarity of policies,
processes and
regulations
- Corporate governance
structure
- Control objectives
clearly defined
- Duties adequately
segregated
- Controls reviewed and
tested periodically
The Internal Control Environment
The internal control environment encompasses the policies, processes,
skills and cultures that exist within an organization to ensure that only
valid transactions are recorded accurately and that rules and regulations
are complied with

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The Supply Chain
Step 1:
End user or buyer
identifies need
and makes
requisition
Step 4:
GRN issued by
stores department.
GRN should match
purchase order
and invoice
Step 2:
Buyer invites bids
and collects quotes
from vendors. A
purchase order/
contract is issued to
the preferred
vendor based on
specified criteria.
(Purchasing
Committee)
Step 3:
Vendor delivers
goods/ service and
issues invoice with
delivery note or
completion certificate
End user
receives goods
from stores
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Overview Of The Procurement Process

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Pre-Solicitation Phase
1
2 Solicitation & Negotiation Phase
3 Contract Performance &
Administration Phase
Procurement & Contract Fraud Schemes
Procurement and contract fraud relates to the purchasing of goods/ services or
commissioning construction projects from third parties. When an organization is
purchasing goods or services, there is scope for fraud and corruption at all levels of
the supply chain. Procurement and contract fraud schemes can be classed into the
three phases of the contracting procedure

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The activities typically involved during pre-solicitation are:
• Need Recognition
• Notice of intent to contract (tender notice)
• Award criteria
The most prominent schemes at this stage of contracting or procurement are:
• Determining needs
• Bid specifications
Pre-Solicitation

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The typical fraud in this phase is collusion between the buyer or end user
and the vendor where the buying organization’s employee receives an
illegal gratuity or a bribe for recognizing the need for a particular product
or service
Pre-Solicitation
Determining Needs (Need Recognition Fraud)

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Bid specifications are prepared to assist in the selection process. They are
intended to provide both potential bidders and the selecting officials with a
firm basis for making and accepting bids.
Pre-Solicitation
Bid Specifications

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Fraud schemes involved during this phase typically involve collusion between
the buyer and contractor and contractors of competing companies in the
bidding process. Schemes in this phase may also involve defective pricing.
Broadly, the prominent schemes at this stage of contracting or procurement
can be classed into the following;
• Bid submission schemes
• Bid rigging schemes
• Defective pricing schemes
Solicitation & Negotiation

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Bid submission schemes can take many forms and can involve anyone in
the procurement/ contracting cycle such as a buyer, engineer or admin
staff. Anyone who can influence the awarding of a tender can be involved.
Solicitation & Negotiation
Bid Submission Schemes

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Most bid rigging schemes involve collusion between contractors of
competing companies during the bidding process. Examples can be drawn
from the World Cup 2010 publicized bid rigging schemes
Solicitation & Negotiation
Bid Rigging Schemes

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Contract performance activities include review of completed works or
delivered goods prior to invoices being paid and assessment of deliverables
for compliance with terms of the contract or purchase order.
There are two basic schemes perpetrated during the performance phase;
• Product substitution
• Mischarges (Accounting, material and labour)
Performance & Administration

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In order to increase profits, the contractor might employ a product
substitution scheme failing to meet the contract specifications in areas of
either quality or quantity of products
Performance & Administration
Product substitution

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Corruption is any abuse of a position of trust to gain an unfair advantage.
This includes both corrupting someone else and being corrupted oneself. It
can be seen as dishonest or fraudulent conduct by those in power typically
involving the following elements;
Understanding Corruption

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At its heart, a bribe is a business transaction, albeit an illegal or unethical
one. A person “buys” something with the bribes he pays. What he buys is
the influence of the recipient. In essence, bribes are paid to influence the
outcome of a business decision.
Understanding Corruption
Bribery

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Illegal gratuities are similar to bribery schemes except there is not
necessarily an intent to influence a particular business decision before the
fact. Usually, a decision is made that happens to benefit a certain company.
The party who benefited from the decision then gives a gift to the person
who made the decision.
Understanding Corruption
Illegal gratuities

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Economic extortion cases are the “pay up or else…” type of corruption
schemes. Instead of a vendor offering payment to influence a decision, an
employee demands that a vendor pay him in order to make a decision in
the vendor’s favour.
Understanding Corruption
Economic extortion

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Conflicts of interest schemes generally the constitute violations of the
principle that an agent or employee must act in good faith, with full
disclosure, and in the best interest of the principal or employer.
Understanding Corruption
Conflicts of interest

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Understanding Corruption
Conflicts of interest schemes

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Conflicts of interests are one of the most difficult schemes to uncover.
Therefore, no there are no easy and fast methods for this type of fraud.
Some of the more common that can be used include;
Understanding Corruption
Detecting conflicts of interest

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Investigation of fraud consists of the multitude of steps necessary to
resolve allegations of fraud – conducting interviews, analyzing evidence,
writing reports and possibly dealing with prosecutors.
The investigation of fraud , because it deals with the individual rights of
others must be conducted only with adequate cause of predication
Investigation
A brief overview

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Fraud prevention requires a system of rules which in their aggregate,
minimize the likelihood of fraud occurring while maximizing the
possibilities of detecting any fraudulent activity that may transpire. The
potential of being caught deters likely perpetrators from committing fraud.
Because of this principal, the existence of a thorough control system is
essential to fraud prevention
Fraud Prevention

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The following are examples of procedures that can be implemented into a
compliance program that is specifically designed to detect and prevent
fraud
Fraud Prevention
Procedures to prevent fraud

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Fraud & the Fraud
Triangle
The Procurement
Process
Fraud Schemes Fraud Investigation &
Prevention
Course Overview

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Disclaimer
Meripro will not be held liable for any representations and assertions made
by the authors of this document. The authors are independent consultants
contracted to prepare this document on behalf of Meripro.
We make considerable efforts to ensure that the information presented in
this document is credible and free from material errors.
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