Advanced Internal Controls for Your AP Invoice

Processing Function

Mary S. Schaeffer

Accounts Payable Now &

Tomorrow

Agenda

O Internal Controls that No Longer Work

O Effective Segregation of Duties

O Practices that Don’t Work

O Eat This not That*

O Do This, Not That

O How Invoice Automation Can Help

* Men’s Health

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Internal Controls that

No Longer Work

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Internal Control Breakdown #1

O Segregation of Duties

Oversights

O Promotions

O The one exception

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Internal Control Breakdown #2

OPayments made outside AP

O ACH and/or Wire transfers

O Failure to follow same rigid standards used in AP

O Likely result: Duplicate Payment

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Internal Control Breakdown #3

OWhen an Employee leavesO Retrieve credit cards

O T&E, p-card, fuel, one card

O Cut off system access

O Notify bank immediately

O Credit cards

O Signing/electronic authorizations

O Deactivate in the master vendor file

O For T&E

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Internal Control Breakdown #4

ORecurring PaymentsO Leases

O End date???

O Early termination of leases

O Start of new one

O Don’t forget to cancel old payments

O Loans and early repayments

O Don’t forget to stop payments on repaid

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Internal Control Breakdown #5

OThe Simple Test Few Do O Employee addresses in HR file vs. Vendor

addresses in Master Vendor File

O Can be done in Excel using the

conditional formatting function

O Many false positives – research

O 2 in 6 years

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Effective and Appropriate

Segregation of Duties

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The Basics

O One person per leg

O Procure-to-pay process

O No exceptions

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Do You Have the Promotion Problem?

O Do you rely on someone hired from

another department?

O When was the last time someone’s

access was closed off

O Don’t forget employees who left

O Run a report showing who has access to

what

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A Word S-Ox

O Section 404 relates to strong internal

controls

O Inappropriate segregation of duties is a

weak control

O Your employees will know

O The long term trusted employee

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When the AP Staff is Small

O Other departments help

O Automation helps

O Audit trail

O Who did what when

O Expect this to be a growing issue

O Most frequently moved

O Master vendor file

O Check signing

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Practices that Don’t Work

Do This, Not That

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Do This, Not That #1

O Best: Centralize receipt of invoices

O Worst: Allow invoices to go wherever the vendor

sends them

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Do This, Not That #2

O Best: Return to sender: unidentified

invoices

O Worst: Try and determine who ordered

goods on unidentified invoices

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Do This, Not That #3

O Best: Everyone uses rigid coding

standard

O Worst: Allowing processors to enter data

as they each see fit

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Do This, Not That #4

O Best: Return to sender: invoice w/o

invoice #

O Worst: Enter invoice data without an

invoice number or use the date or vendor

number as invoice number

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Do This, Not That #5

O Best: Regularly review statements for

open credits

O Worst: Never reviewing statements

hoping the vendor will alert you to open

credits

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Do This, Not That #6

O Best: Never return checks to

requisitioners

O Worst: Return checks to anyone who

asks

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Do This, Not That #7

O Best: Have a policy regarding use of

personal devices

O Worst: Ignore the issue allowing

employees to bring their own devices to

work and use for company initiatives.

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Do This, Not That #8

O Best: Learn as much as possible about

invoice automation including how various

vendors’ products work

O Worst: Ignore the issue hoping it will go

away

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Practices that Don’t Work

Do This, Not That

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Reality Moving Forward

O Technology and automation inroads

O IFO conference

O First ATM

O First online bill payment

O Costs are plummeting

O No longer a big-company phenomena

O Invoice automation is for everyone

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Benefits of Invoice Automation

O Human keying errors eliminated

O Personnel freed up to work on more value

added work

O Dispute resolution

O No processor playing games

O Paying favorites faster

O “Losing” problematic invoices

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Additional Benefits

O Faster processing

O Discrepancies identified early on

O Invoices sent for approval automatically

O Clear audit trail and hence

O Faster approvals

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Have You Scheduled a Demo?

O Call: 1-877-426-9245

O E-mail: info@anybill.com

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Questions/Comments

Share your thoughts and insights with

Mary Schaeffer by writing her at

marys@ap-now.com

Sign up for her free weekly ezine at

www.ap-now.com/ezinesignup.html

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About Mary SchaefferEditorial Director & PublisherCRYSTALLUS, Inc. publisher Accounts Payable Now & Tomorrow newsletter

• Creator of Institute of Financial Operations Accounts Payable Innovation Certificate program

• Editor-at-Large CFO Publishing’s Learning Pro: AP Edition

• Nationally recognized accounts payable expert and consultant

• Frequent speaker at seminars, conferences and online events

• Regular contributor to the AICPA’s Corporate Finance Insider

• Writes a free weekly e-zine, e-AP News

• Author 17 business books including the just-published 101 Best Practices for Accounts Payable

• M.B.A. Finance, NYU

• B.S. Math, York College

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