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Face Up to Fraud

Discover the Four Key Areas Where Accounts Payable is vulnerable

Unfortunately, when it comes to fraud, the old saying “where there’s a will there’s a way” tends to ring true.  While global connectivity has brought the business world closer than ever before, it has also brought new ways to commit fraud along with it.  However, you can fight them at their own game, and turn technology to your advantage.

Would-be crooks rely on corporate inefficiencies and look to exploit our human frailties and ability to get things wrong.  Automated processes in Accounts Payable can address this by incorporating various controls which enable the integration of verifications along the way.  One very simple way to control any monetary leakage out of the AP area is to set authorisation limits amongst employees – that way when an unauthorised person tries to approve at a given level – the invoice can be moved up a level without any human intervention.

Keeping a close eye on Accounts Payable

Key areas to watch out for:

  • Master Vendor File
  • The Three Way Match
  • Travel & Entertainment
  • Budget Control

Master Vendor File

In a busy AP department, the master vendor file can often be overlooked and yet this is an area very susceptible to fraud.  A bogus account within a file of thousands of vendors can be very difficult to spot manually.  A savvy employee with an eye to lining his own pocket with know this, and can often manage to siphon off quite a bit without being detected.  Strange as it may seem, a run of all employees’ addresses against the master vendor file can sometimes pinpoint a culprit!  In addition, purchasing bolt on technology to your ERP system to highlight inaccuracies within your master vendor file can deter and flag up any existing peculiarities.

Easy as 1, 2, 3

Technology also allows automation of the three way match.  All invoices with discrepancies can be thrown out of the system for manual processing & checking.  Alternatively, depending on the level of automation you have/or want to have, they can be highlighted in a further area of the reconciliation automated function.  Either way, automation acts as a deterrent for those who would otherwise use discrepancies to their advantage.

Travel & Entertainment

There has long been a culture of acceptance that it’s somehow ok to defraud the organisation in this area.  Unsubstantiated claims for corporate entertainment, or vastly inflated spending claims, are often thought of as par for the course.  However, as long as it’s adhered to, automated travel & entertainment policy compliance make this virtually impossible.  While the main aim for the introduction of T&E compliance modules has more to do with compliance than catching out unscrupulous employees – it does have the added benefit of deterring any rouge transactions.  In addition, if an employee is hell-bent on defrauding an organisation – it’s only a matter of time before his eye falls on the T&E sector – and is often the area where he is caught out, leading to their other dealings within the organisation being investigated.

There’s a Budget for a Reason

So much valuable time is spent deliberating over a large organisation’s yearly or quarterly budgets and yet how often are these budgets actually adhered to?  Quite often the difference between budgeted spend and actual spend is remarkable.  Accounts Payable departments have the tools at hand to be able to address some of these discrepancies by negotiating better discounts, recouping discounts not taken up and negotiating better pricing terms.  In some exceptional cases it could be that a particular supplier is actually giving a back hander to the organisation’s purchaser.

So What Can You Do?

  • Maintain and oversee new account opening procedures
  • Implement invoice approval authorisation limits
  • Automate your reconciliation process
  • Use bolt on Travel & Entertainment compliance technology
  • Implement an automated checking system on your Master Vendor File
  • Maintain an accurate and automated audit trail
  • Conduct surprise audits
  • Run employees addresses against the Master Vendor File
  • Educate & train staff

While this isn’t an exhaustive list, if your Accounts Payable department implements these procedures – not only will it be more efficient and compliance friendly – it will be going a long way to preventing and discovering any fraudulent activities. So hopefully while the will may still be there, in the future potential fraudsters may well find the way blocked..

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