Vendor and Procurement Fraud: Are you taking this simple preventative step?

Billing fraud and corruption account for more than half of the reported incidents of fraud in the United States. The 2012 Report to the Nations on Occupational Fraud and Abuse, released by the Association of Certified Fraud Examiners (ACFE), reported that billing fraud and corruption accounted for 26.1% and 25.1%, respectively, of the 778 total cases reported in the U.S. in 2012. In order to prevent fraud in your organization, you might have performed a fraud risk assessment, ensured your internal controls are functioning as expected, and outlined policies and procedures to monitor acceptable behavior between vendors and employees. But have you performed due diligence on your vendors?

The United States government is the largest purchaser of goods and services in the world, purchasing more than $250 billion in goods and services each year. The U.S. government has compiled and made available to the public a single, comprehensive, and searchable list of individuals and entities excluded from participation in federal programs. These excluded parties are prohibited from receiving federal government contracts or federally approved subcontracts and certain types of federal financial and non-financial assistance and benefits. Exclusions can result from poor performance, fraud, corruption, bribery, immigration issues, or antitrust issues, to name a few.

The list, formerly known as the Excluded Parties List System (EPLS), was recently integrated into the System for Award Management (SAM). SAM is updated in real time by all federal agencies, and all federal contracting officers are required to review SAM prior to awarding a government contract to a vendor. Among other data, SAM shows the classification, full name and address, exclusion program, excluding agency, exclusion type, additional comments, active date, termination date, cross-reference with related entities, and SAM number (unique identifier assigned to each exclusion).

The data is searchable through an online database found at or by downloading a spreadsheet of all active exclusion records (under “Data Access” on
While having a clean SAM record does not guarantee a worry-free vendor relationship, searching SAM for prospective or current vendors is a quick and easy measure that might help avoid fraud, cut costs, and reduce legal fees in the future.

Schneider Downs Business Advisors have extensive experience in addressing a wide range of fraud and contractual issues. To learn more about how Schneider Downs can help you, please contact Joel Rosenthal at 412-697-5387.

© 2013 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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