The importance of digitising Procure-to-Pay
In organisations, there is a common misconception that fraud is something that happens to “other” businesses, and this is also true in education. However, it’s estimated that 5% of all annual revenue is lost to occupational fraud[1]. By digitising the Procure-to-Pay process, from purchase order, receiving goods or services, to invoice approval, schools can prevent and minimise the cost of fraud, while also benefiting from more efficient and cost-effective operations.
Occupational fraud in education
As the statistic above suggests, fraud is incredibly widespread. The most common type of occupational fraud, a form of asset misappropriation, makes up 86% of occupational fraud cases and costs an average of $100,000 USD per case. Given the large sums that can be involved, periodical training on what occupational fraud is – and how to handle it – are a must for all schools.
It’s estimated that a third of all fraud is caused by poor internal processes such as those that rely on paper. When such fraud does happen, outdated practices like these make it exceptionally difficult to identify, giving plently of room (and time) for fraudsters to hide.
This is why it’s not uncommon for cases of fraud to go on for over an entire decade; and the longer the fraud goes on, the more money that’s lost.
Cases in Australian education
Moriah War Memorial College
In 2019, the 57-year-old CFO at Moriah War Memorial College defrauded the school of $7.4 million over a fifteen year period. This occurred across 402 separate transactions that ranged from $2,000 to $241,000 each.
Kimberly College
A 74 year old male who was the founding principle for Kimberly College from 2000 to 2018 stole $4.6 million over a seven year period. Members of his family were involved, and together they defrauded chunks of this money from the Department of Education by requesting funding for oversea trips to China, Dubai, Spain and Sweden.
Digitisation
A forensic investigator working on either of the above cases would have advised each school to digitise its procure-to-pay processes in order to reduce fraud of this nature from happening again.
Digitisation is the ability to securely scan and index documents and accounts into electronic files, ready to be integrated into a a full-service procure-to-pay system. Fundamentally, digitisation offers schools control and visibility; contributing to successful fraud prevention.
The benefits to education
Secure digitisation ensures that any deviation from Delegation of Authority (DOA) across the whole procure to pay life-cycle must be accompanied by a record in the system. It gives schools the ability to track any invoice throughout this whole process. This includes who is approving it, whether there has been a change in bank details, and how and when a new vendor has been registered. It’s also important to ensure a separation of duties between purchase and pay, and a well documented and communicated DOA can help stop fraud in it’s tracks.
Digitsation and automation also provide a host of extra benefits, such as complete visibility of commitments ahead (giving you as much time as possible to manage your cashflow) and a more efficient workforce.
Furthermore, were fraud still to happen within a department that runs with such an automated workflow, a forensic investigator can quickly and easily understand what took place. Halting any fraud from continuing and reducing the duration – as well as the cost and disruption – of the investigation itself.
FUJIFILM Business Innovation
External auditors only find fraud in 4% of investigations. But with fraud costing every business an estimated 5% in annual revenue, schools simply cannot rely on external audits to detect it. This is why we have made it our mission at FUJIFILM Business Innovation to offer every school accessible, secure digitisation that they can integrate into their procure to pay function.
To learn more about how we can help you and your staff save time and money by automating your procure to pay workflow, visit www.fujifilm.com/fbau or call 13 14 12 for more details.