if not, vendor file incomplete 1099’s could be impossible ... · pdf fileset up vendors...
Post on 11-Feb-2018
219 Views
Preview:
TRANSCRIPT
Set up vendors before any payments are madeIf not, vendor file incomplete1099’s could be impossible to prepare and
government could be assessed fines and penalties
No standards result in vendors in A/P multiple times – with different names.
Consider John Henry Smith, Jr. John Henry Smith, Jr. John H. Smith, Jr. Smith, Jr., John H. Smith, Jr., John Henry
Who Am I
Include LLC or Inc. or Corp if part of name
Exclude articles (A or The) if part of name
For individuals, decide if prefixes are to be included and use consistently
No periodsOne space after each initialNo apostrophesConsistent use of abbreviationsAmerican could be Am or Amer
Best Accounts Payable practice is to have a standard for coding names and INVOICE NUMBERSSet a policy and communicate that policy
Limiting access also limits ability to make changes to the master files
Changes should not be made by data entry personnel
System should automatically generate report detailing changesViewed by Accounts Payable manager or other
management
Why cleanup vendor master files?
Unused VMF take up valuable space on systemWhy keep vendor info from 10-20 years ago?Misspelled then – misspelled nowDuplicate names then – duplicate names now
1. Restrict access to the VMF so that only one person (plus a back-up) can set up or change vendor records
2. Obtain a W-9 form PRIOR to vendor set-up and payment
3. Validate the TIN and vendor name using the IRS TIN matching system
https://la2.www4.irs.gov/PeopleBooks/CRMPROD/Training/3pdev/index.htm
4. Validate vendor address and phone number prior to vendor set-up
5. Check vendors with Federal Bureau of Industry and Security’s lists of excluded persons and companies
6. Establish and enforce policy for data entry formats
7. Only pay employees through A/P for accountable plan transactions
8. Purge vendors with no activity for 15 months9. Audit changes to vendor master files10.Written procedure manual to cover every
aspect of VMF maintenance
Best Practice
A/P should maintain listing of all invoice approvers
Acceptable Practice
List of who can approve what purchases
Worst Practice
A/P allows anyone to approve invoices
o BEST PRACTICE – Invoice should be routed initially to Accounts Payable• A/P logs invoice in• A/P sends to appropriate approver, if necessary
oMake use of technology• Scan those invoices in and send via email to
appropriate approver
o Invoice first sent to Accounts Payable also is a control against employee fraud• Invoices cannot be altered
WORST PRACTICETo have no policy on this
issue
World isn’t perfectTerms on invoice do not match PO terms
Partial shipments
Damaged goods are delivered
Prices on invoice do not match PO prices
Related charges included or excluded
Sales tax charged
BEST PRACTICE3-way match of invoice, PO and receiving report
Resolve differences
Price difference – take lower price
Require PO to be filled out completely BEFORE purchase is made
BEST PRACTICE – Have a policy and CONSISTENTLY use the policy
No right or wrong way to code invoices
In checking for duplicate payments –run by invoice numbers
Resource: www.doveconsulting.com
https://www.frbservices.org/files/communications/pdf/research/2013_payments_study_summary.pdf
Communicate check schedule including cut-off points
Print A/P checks on laser printerEliminates expensive check stock
Special paper can be used that is sequentially numbered and has safety features
Keep log of sequentially numbered safety paper
Limit number of people who can print checksPreprinted check stock should be kept under
lock and key and also log kept of checks used
BEST PRACTICES varies by size of governmentSmall dollar checks Two signatures best – one signature plate
and one manual
Large dollar checks Two manual signatures required
• Secure, locked location• Access severely limited• Reinforced closet with substantial
lock• Sufficient segregation of duties
• Those with access cannot print checks
• Those with access cannot reconcile bank statement
BEST PRACTICE Written policy that checks will be MAILED to the
Pay-To address If check is not mailed, maintain log:
Check number, payee, dollar amount
Date check was issued, date check paid
Name and signature of person picking up the check
HOW checks should be mailed Sealed envelope directly to Post
Office or mail room
Good Internal Control
Signed A/P checks mailed by someone other than the ones printing and signing checks
500 million checks forged annuallyLosses expected to grow 2.5% annuallyRanks second to embezzlement on crimes
hurting America’s top 1,000 companies
o Limit only to emergencieso Same people consistently have same
emergencieso Eliminate duplicate payments by thoroughly
checking files before rush check is issued
top related