[webinar] ap efficiency: it's all in the controls
TRANSCRIPT
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
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 4
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
© 2012 Accounts Payable Now & Tomorrow and
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
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 7
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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Mary S. Schaeffer 8
• Sign of weak internal controls
• a few places: Firing offense
• What about short vacations
• A better approach
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 9
Workarounds: A Better Way???
What’s a workaround?
Is it better?
Will it create problems elsewhere
Everyone or no one
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 10
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
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Mary S. Schaeffer 11
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
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 12
A Word about Management
Overrides
Fix records
Journal Entries
Backup documentation
Double sign off
Can be fraud problem
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 13
Promoting from within
Great move
What about their system access??
How you know you have the problem
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 14
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
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 15
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 17
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
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 18
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 19
First Step: Segregation of Duties
The collusion factor
What happens with small AP departments
Bigger problem in the future
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 20
Make Managers Responsible
Look before they sign
Consequences
Firing - rare
Part of annual review
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 21
Visibility
Does NOT mean unlimited
access for anyone who wants it
Only as appropriate
Remember SS # and TINs
Ideally AP and purchasing simultaneously
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 22
Centralize Receipt of Invoices
One snail mail address
AP
bank
One email
Invoices@
AP@
One fax
In AP for invoices only
E-Fax
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Mary S. Schaeffer 23
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
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Mary S. Schaeffer 24
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
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 25
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 26
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
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 27
Big Benefit
Strategic – Accounts Payable
automation frees you and your
staff from mundane tasks, giving
you more time to focus on your
business.
How You Can Get Started
Talk to peers
Vendor demos
Ask Anybill
Email: [email protected]
Call: 877-426-9245
© 2012 Accounts Payable Now & Tomorrow and
Mary S. Schaeffer 29
Thank you/Questions
Questions always welcome.
To share your thoughts and insights
Mary Schaeffer
302 836 0540
Sign up for our free weekly ezine at
www.ap-now.com/ezinesignup.html
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Mary S. Schaeffer 30
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]
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Mary S. Schaeffer 31