Conflict of Interest (“COI”) occurs when employees have undisclosed
economic or personal interest in a transaction that adversely affects
their employer (extracted from The Association of Certified Fraud
All organisations uphold the principle that
employees must act in good faith and in the best interests of their
employer or organisation.
It is a COI when employees channel
their employer’s procurement or sales to members of their immediate
family (defined as spouse, child, sibling, parent, stepchild,
step-parent, as well as mother-, father-, son-, daughter-, brother-, or
sisterin- law). If a relationship with a distant relative or friend
could influence the employee’s objectivity, then it is also a COI.
Common types of COI
Purchase Scheme – employees direct purchases from a company in which they have a personal interest.
Scheme – employees abuse their position to sell at lower prices or
delay billing to a company in which they have an undisclosed interest.
They may also establish a company to compete with the current company
and lure their employer’s clients and staff to their own company.
Detection of COI
The common ways to uncover COI are:
• Tip-offs and complaints (whistle blowing)
• Data analysis of suppliers/customers and employees/their families
• Review of supplier and customer ownership information
• Interviews of management on favourable treatment/terms given to suppliers/customers
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