Supply Chain Fraud - Slide - Purchase Order Frauds

Because the purchase order is a contract to buy goods and services, purchase order frauds can involve false pricing and discounts, part substitution, fictitious purchase orders, changing quantities, and changing delivery dates.

Much like the trigger frauds, purchase order frauds are probably the result of collusion between the buyer and the seller. However, that is not to say that the buyer may be falsifying purchase order data for their own fraud schemes.

The buying party’s purchase order is the selling party’s sales order. Sales order fraud can be perpetrated by overzealous sales people who seek to increase their numbers and thus their commission, even if the customer returns the goods or cancels the order later. Even with good accounting and sales commission practices, the sales person essentially can use these tactics to float the employer’s money.

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