As you know, with proper internal controls along with segregation of duties, establishing a new vendor or updating the Vendor Master file will reduce the exposure of fraud. Without being complacent regarding fraud, you are probably comfortable with your current updating 토토사이트. Many A/P shops are faced with recent or anticipated A/P system and process changes that you know has or will disrupt the Vendor Master process status quo. To gain increased efficiencies and productivity, A/P and procurement applications are relying on the use of internet and intranet technologies to update the Vendor Master. Use of these technologies should present an opportunity for A/P to improve internal controls or in fact may present internal control challenges when updating the Vendor Master.
Let me first address the latter – The Challenge. “According to a recent global study by PriceWaterhouseCoopers and the Martin Luther University in Germany, corporate fraud increased 22% over the last two years…Despite significant investment in internal corporate controls in the wake of Sarbanes-Oxley Act.
The study also noted that most corporate fraud was detected by accidental means. Therefore, implementing preemptive internal control enhancements will only help in your attempt to minimize your exposure to fraud, especially when the integrity of Vendor Master is to be maintained. Let me describe a how a productivity enhancement presented a challenge for one company to protect itself against fraud. During a recent recovery audit I conducted, A/P headcount was reduced when the company installed an A/P linked front end intranet application that allowed and authorized non A/P employees to enter invoice and account code data, and access the Vendor Master to identify the vendor number, etc. The data was edited for completeness and for valid account coding before it reached the A/P application and A/P processor. When the invoice and the approved input document were received in A/P the A/P processor would perform their normal processing and approval routines. What caught my attention was process now allowed employees who now performed the front end invoice processing to establish a new vendor in the Vendor master.
Although the new vendor entry into the Vendor Master had to be approved by an independent party, I felt new process opened up the A/P tasks to potential employee mischief and fraudsters. Although A/P increased its vigilance over the new process, some additional actions using the Internet to guard against potential fraud involving the Vendor Master needed to be taken were some of the actions I normally recommend to my clients.
I feel that use of the Internet is cost effective and is an opportunity to monitor the Vendor Master updating process….keeping in mind that the extent of the controls adopted by any business is often limited by cost considerations. Realizing that it is not feasible from a cost standpoint to establish controls that provide 100% protection against fraud, adopting a vendor verification process that will add reasonable assurances against fraud is probably the best that can be achieved.
Confirming New Vendors
When I managed an A/P department, we verified that new vendors with significant first time payments were legit. Also, payments to vendors who provided only a PO box as a remit to or address. Back in the days before the internet, we used D&B and any other manual means to confirm their authenticity – like the yellow pages, phone contact, etc. Yet, today it is much easier to perform this check on almost every new vendor using the internet (web sites and yellow pages) and on line D&B, Hoover access, etc. During my A/P audits, I always recommended this added control to protect my clients against any potential fraud.
Why Is Front-End Verification Is Important
I bring this to your attention, since there are a number of front end AP systems
The employee then prints out the coversheet, obtains management approval (signatures) on the coversheet, attaches the invoice to the cover sheet and forwards the packet to AP for payment. In such front end systems where every field AP needs must be completed by the invoice submitter, mischief can occur.