Red flags mean situations that deserve special attention and that must be carefully observed by managers and, mandatorily, by compliance officers and auditors. In short, they are warning signs, which should not and cannot be ignored.

Acting with a preventive focus, especially in risk management processes, red flags can help prevent numerous problems for the company, whether these problems are caused intentionally or not, by the agent.

This article is intended to enumerate a vast list of these red flags, which is not exhaustive, but deserves the attention of everyone in the corporate environment. Let's move on to the list below:

• Absence of written contracts or documentation that confirms the transaction (eg, invoice, receipt, etc.);
• Absence of control of internal inventory and distributors;
• Absence of documents for reimbursement of expenses (ex: invoice, receipt, etc.);
• Absence of a compliance program;
• Omission of any supplier of goods or services internally, preventing them from being known to other employees;
• Concentration of payments to a vendor;
• Generic accounting bookkeeping that can hide inappropriate or illicit payments;
• Hiring of relatives of Government officials, clients or vendors;
• Contracting services without a legitimate business need;
• Contracts or agreements without clear dates for the delivery of goods or services;
• Deferral of payments to the same vendor;
• Beneficent donations made to individuals;
• Beneficent donations linked or at the request of a politician or Government official;
• Due diligence pointing out problems with the vendor;
• Requirement of advance payment for the purchase of goods or services;
• Lack of detail in the services to be provided;
• Vendor appointed by a Government official;
• Vendor has interaction with Government officials;
• Vendor is new to the market;
• Vendor does not have the necessary qualification to provide the service with the expected quality;
• Vendor refuses to submit to due diligence;
• History of fraud or corruption;
• Success fees;
• Hospitality in excess or with luxury items or places;
• Incompatibility of purchase in relation to the company's needs;
• Failure to keep updated and balanced accounting books;
• Failure to apply disciplinary measures in cases of violation of conduct;
• Business with companies owned by relatives or managed by relatives;
• Fee for services out of a fair market value, especially if the objective depends on any government action;
• Payment in cash (in kind) to someone or from someone;
• Payment in an amount above the limits ruled by the company or by the codes of conduct of industry associations;
• Payment or reimbursement of expenses for companions of public officials, clients or vendors;
• Payments to authorities or a third party at the request of the authority;
• Gifts given to Government officials, clients or vendors;
• Gifts received from vendors;
• Provision of a service for a third party and payment for another;
• Generic expense reports, without detailing or with false information;
• Rumors that the vendor has interaction with a Government official or its image and reputation is tarnished;
• Separation of personal payments and expenses from corporate payments and expenses;
• Engagement of third parties, without applying the same obligations of the contractor;
• Overpricing;
• Transactions with non-accredited or non-validated vendors;
• Transactions not accounted for or intentionally erroneous accounted for; and
• Money transfers to / from bank accounts outside the country where the company does not operate.

Any company that aims to avoid problems for the business, can start to pay more attention to these points.

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