- March 1, 2017
- Posted by: admin
- Category: Vendor Fraud
How many vendors do you have in your vendor or accounts payable master file? Who knows you say…and more so; what’s it matter? However maybe there is more reason for concern than one thinks. After all, cash can only leave an organization through two sources: payroll and disbursements (i.e. – vendors).
No one ever gives much thought to accounts payable Masterfile maintenance until there is a planned migration to a new accounting or ERP system; and even then we only focus on active vendors whom have had recent activity. But is that right or is this very important and fraud susceptible area being overlooked?
It has been my experience that accounts payable Masterfile maintenance “Best Practices” should include:
Knowing who you are doing business with through robust vetting of vendors before they are added to you AP Masterfile.
- Are they legitimate vendors or shell companies?
- Check there FEIN with the IRS for legitimacy.
- Is the vendor’s management team related to any other vendors in your Masterfile or employees or does there business address match other vendors or employees in your organization?
Periodic review of the vendor Masterfile looking for duplicates or missing data like addresses or FEIN’s, opportunities for rebates, returns, or credits
- Export the vendor master file and review content for critical elements of data like address, FEIN’s, duplicate entries, etc.
- Look for rounded total payments, duplicate invoices numbers, and related anomalies
- Look for missed discount opportunities as well as compliance with contractual terms
Transparent disbursement system
- Consolidate operations with a single worldwide view of operations
- Communicate pre-disbursement requirements to the organization clearly
Implement a continuous monitoring process of AP data and transactions.