[webinar] ap efficiency: it's all in the controls

Accounts Payable Efficiency:

It's All in the Controls

Mary Schaeffer

Publisher & Editorial Director AP Now

Author Controller & CFO’s Guide to Accounts

Payable + 15 other business books

Agenda

Background

Control Problems

Solutions to Control Issues

Closing thoughts

© 2012 Accounts Payable Now & Tomorrow and

Mary S. Schaeffer 2

Background


Mary S. Schaeffer 3


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What Do We Mean by Control ‘Issues’

The processes that ensure:

Efficient and effective operations

Reliable and accurate reporting

Fraud resistant operation

Internal

External

Regulatory compliant


Mary S. Schaeffer 5

Why Are Strong Internal Controls So

Important

Stop duplicate pays

Prevent/Deter/Detect Fraud

Accurate Financial records

Less likely to have IRS trouble

S-Ox compliant

Control Problems


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The Audit Trail

Who did what and when

At the root of many AP/Purchasing disputes

Difficult in a paper world

Passwords and User IDs help

Weak audit trails – more fraud

Password Sharing


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• Sign of weak internal controls

• a few places: Firing offense

• What about short vacations

• A better approach


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Workarounds: A Better Way???

What’s a workaround?

Is it better?

Will it create problems elsewhere

Everyone or no one


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Signs of Weak

Policy and Procedures

Not written down

Each processor develops their own

workarounds or shortcuts

No limits on the master vendor file

One person doing more than one piece of

the P2P transaction



Lack of Standardization

No creativity when processing invoices

Everyone does it the same

Data entry

Invoice numbers Limitations imposed by system

Key what you see

Leading zeros

Punctuation

Names



A Word about Management

Overrides

Fix records

Journal Entries

Backup documentation

Double sign off

Can be fraud problem



Promoting from within

Great move

What about their system access??

How you know you have the problem



Human Error

Everyone makes mistakes

Your controls should catch

Don’t let it be a light bulb moment

Many frauds start with an honest mistake

Invoice submitted twice

T&E: Item paid by corporate card and Reimbursed

on expense report

The Biggest Problem with Weak

Controls

Your employees know where your weaknesses are

Exploit those weaknesses

The long term trusted employee



Control Solutions





Newest Approach

Policy of Zero Tolerance

Fraud

Policy abuse

Ethical breaches

Fire

Prosecute

Set the Tone from the Top

Corporate Culture

Flows from the top

Letter on T&E Policy

No special treatment





First Step: Segregation of Duties

The collusion factor

What happens with small AP departments

Bigger problem in the future



Make Managers Responsible

Look before they sign

Consequences

Firing - rare

Part of annual review



Visibility

Does NOT mean unlimited

access for anyone who wants it

Only as appropriate

Remember SS # and TINs

Ideally AP and purchasing simultaneously



Centralize Receipt of Invoices

One snail mail address

AP

bank

One email

Invoices@

AP@

One fax

In AP for invoices only

E-Fax



Tracking Discrepant Invoices

Why

Duplicates

Fraud

In Excel or system

Regular Follow up and reporting

Aging

The list no one wants to be on

Analyze



Standardization Everything related to invoice processing:

Procedures Written policy and procedures manual

Data entry

Invoice numbers

Addresses

Names

Punctuation

Policy and Procedures Manual

Detailed

Written

Updated regularly

Shared with everyone

Can be used as a training manual

Reference guide





Invoice Automation

• Easiest way to incorporate strong internal controls throughout the process

• Easiest way to standardize

• Wave of the future

• No longer costs a small fortune



Big Benefit

Strategic – Accounts Payable

automation frees you and your

staff from mundane tasks, giving

you more time to focus on your

business.

AP: Yesterday vs. Tomorrow



How You Can Get Started

Talk to peers

Vendor demos

Ask Anybill

Email: [email protected]

Call: 877-426-9245



Thank you/Questions

Questions always welcome.

To share your thoughts and insights

Mary Schaeffer

[email protected]

302 836 0540

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About Mary Schaeffer

Mary Schaeffer is a nationally recognized accounts payable expert. Following a career in finance she turned to writing and consulting. For the last 15 years she has been researching and writing newsletters for the accounts payable profession. Currently she is the Editorial Director & Publisher of Accounts Payable Now & Tomorrow, (www.ap-now.com) a fee-based newsletter published by CRYSTALLUS, Inc.

She also handles most of the firms consulting assignments (focused primarily on AP issues) often working with other well-regarded professionals. Her blog, at http://ap-now.com/blog/ is read by over 15,000 professionals each month.

Ms. Schaeffer is the author of over 15 business books including The CFO and Controllers’ Guide to Accounts Payable and the recently published Fraud in Accounts Payable: How to Prevent It. John Wiley & Sons is the publisher of most of her books.

She also is a regular contributor to the AICPA’s Corporate Finance Insider.

Ms. Schaeffer has a BS in Math from York College (CUNY) and a MBA in Finance from New York University.

She can be reached at [email protected]



http://www.ap-now.com/



http://ap-now.com/blog/






[webinar] ap efficiency: it's all in the controls

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