Strengthening procurement and supply management and reducing procurement costs are important initiatives for enterprises to safeguard their business objectives. The exercise of audit oversight functions, the conduct of price audits for the procurement of goods, the review of the reasonableness of procurement prices, the review of compliance with the pricing process, and the examination of the potential for fraud in the procurement process can reduce the cost of the enterprise's products, improve economic efficiency and increase profitability。
Contents of price audits. Information required
The system and regulation of price setting developed by the enterprise, procurement contract billings, quotations from various suppliers, related requests for quotations, price bargaining, price criteria, simultaneous periods on the market, price comparison information for the same type of material, price movement information, market demand information, price approval information。
Iii. Some common methods for procurement price audits (i) internal comparison methods
The internal method of comparison is to compare past procurements within the enterprise, vertical comparisons of procurements over time, analysis of trends in procurement prices, ranges; or procurements between different suppliers at the same time, horizontal comparisons between suppliers; similar purchases of different business blocks, etc., to determine the reasonableness of the procurement price。
(ii) market request law
Market request for quotations is the most common and important method of conducting price audits, where information on the prices of different suppliers of the assets to be audited is available through the request for market quotations, where the most reasonable and favourable price criteria for the enterprise have been determined by comparison, and where at least three or more simultaneous suppliers of the same type of asset are requested。
(iii) consolidated value method
The combination takes into account the purchase price of the assets purchased as well as other related costs that may arise from the procurement process, such as transportation costs, taxes, removal costs, installation costs, etc., and is used as a reference for better determining the best price。
(iv) price limit method
On the basis of the short-term sale of the assets, and taking into account market variability factors, the maximum price is determined as an audit standard for controlling the purchase price of the items, and the auditors may request the respective agreement between the supply and demand parties to control the purchase price at the market price at the time of delivery。
(v) cost analysis
Cost analysis could be used for the procurement of assets for which there is no fair market price or no equivalent market price. Such an audit would normally require an analysis, calculation and determination of the fair price of the item as a reference for an audit of the various factors affecting the price of the material (materials, works, fees, profits, taxes, etc.)。
(vi) expert assistance law
When dealing with assets that are relatively specialized, have a high technological content and do not allow for the recognition of market prices or price standards, the work of experts can be used, as necessary, to enhance the authority, credibility and better achievement of audit objectives。
Iv. Audit process v, common issue vi, possible fraud in procurement quotations
In order for the relevant approving officer to appear to have an adequate price, the procurement staff may find a single or even multiple vendor to count or match the price so that the vendor will deliberately raise the price and win the bid against a supplier who has an interest in it。
In some cases, weaknesses in controls over procurement, incomplete stamping of procurement quotations, lack of signatures or even of signatures, and in some cases manual revisions of quotations, are clear fraud gaps。
Procurement staff may sometimes threaten to force suppliers to cooperate with their own fabrications by offering only one price, which is higher, and then no more。
The introduction of new suppliers generally requires a process of on-site inspection, assessment and access, and there is a high risk of the temporary introduction of uncertified suppliers. When urgent procurement is undertaken, some procurement staff deliberately take advantage of the need for emergency procurement, make ad hoc selection of non-qualified vendors that have not been visited, and make the selection of new suppliers more discretionary, leaving considerable room for fraud。
While some suppliers had worked well when they had just imported them in the prior period, after some time there had been little interest in the enterprise's solicitations or the company had simply given up, and the company had not taken the initiative to change its management strategy for the supplier, which might have led to withdrawals owing to conflicts of interest between the supplier and the procurement staff concerned。
A procurement offer that is not a very small temporary emergency procurement typically requires a request for quotations and a bid against multiple suppliers, and a risk of fraud or inaction if the procurement staff invites only one or two suppliers, even one directly, and saves the process of comparison, or introduces non-mainstream vendors within the industry。
In one procurement, for example, the asset itself and the processing of the product are offered separately, which requires careful comparison of the price of the product itself and the price of processing, installation, etc. While some suppliers may have cheaper primary products than others, higher product processing fees, installation fees, etc., while others may have cheaper primary products, processing fees, installation fees, etc., require that procurement staff consider both fixed cost and variable analysis comparisons. There is also a risk of collusion between procurement staff and vendors。
Vii. Case resolution
Public tendering for “computer procurement” is organized by an enterprise procurement department. Tendering projects take the form of post-qualification, comprehensive evaluation of bids, with commercial and technical bids accounting for 50 per cent each. The tender units were aa, bb, cc and dd. The first bidder to be evaluated was aa。
Doubt one: aa won a much higher bid than market prices, and a sample of several generic computers with performance models close to internet prices found that prices varied significantly, i. E. The unit price of wholesale products was much higher than the unit price of retail products。
Question two: the four agents represented the brands of both imported brands and national brands, which vary considerably, but the difference between the maximum and lowest bid price is 6. 5 per cent, which is not much different。
Doubt three: except for the successful bidder, who responded to one of the terms of the solicitation documents with 10 points, the three other bidders failed to respond and lost 10 points in vain。
Question four: the successful bidder, aa, and the bid commercial representatives of bb, who participated in the bidding, belong to a city. What's their relationship
Doubts one, two and three could not be properly substantiated, so doubt four was key to the audit findings。
As a result of the investigation, it was found that the business representative of bb, who participated in the tender, was not an employee of ee。
What is ee's relationship with the winner, aa
The national enterprise credit information system was consulted with questions, and both ee and aa were funded by two natural persons, yy and z. Ee registered funds amounting to 10 million yuan, of which yy contributed 5. 1 million, zz contributed 4. 9 million and zz was the legal representative; aa registered funds of 5 million, of which yy contributed 3 million, zz contributed 2 million and yy was the legal representative。
Based on the above information, aa and bb were found to have colluded in bidding and were eventually blacklisted on the market for five years。
Following the rebidding, the same goods and better performance were reduced by about 46 per cent, reversing the common sense joke that wholesale prices were higher than retail prices。
