A business is all about transactions. With over hundreds of genuine transactions which occur day in and day out, it is a matter of ease for any fraudster to hide the illegitimate transactions. Accounts payables transactions are the most vulnerable and can be misrepresented easily. Here are the few convenient means of manipulating accounts payable data for that extra money.
- Duplicate payments:
When a company does not have stringent internal controls then it is very likely that an invoice or an employee expense gets paid multiple times without raising an alarm. For instance a vendor can make a slight change to the invoice number or the invoice amount and the invoice is likely to get paid without getting selected as a duplicate invoice. Several good software fail to detect such invoices. It is crucial for the business to conduct regular audit to prohibit such a situation.
- Invoices with below approval amounts:
Most of the firms have authorised approvers for invoices who have to approve every invoice with a set value. Fraudsters usually tend to create and submit invoices with lesser amounts so that the invoice doesn’t end up with the approvers. Hence, it is important that every business has a regular check and audit performed for invoices with lower transaction values.
- Vendor data management:
If there are several records in the system for one vendor then there are possibilities that same invoices are matched with two or multiple different vendor numbers and processed for payments. The same can be the case for employee expenses. Having a clear vendor data is hence important for the business.
- Check Theft search:
Most Accounts Payable departments conduct a reconciliation of Accounts Payable with the monthly Bank Statement to identify any discrepancies between the two. This process can also be instrumental in identifying check fraud. One simple way to spot potential check fraud is to identify missing check numbers or gaps in reconciled checks numbers. This is usually indicated on the bank statement with a ‘*” or ‘#’ to indicate the check number is not sequential.
- Over the limit vendor payments:
This algorithm identifies invoices that are way above average for a particular vendor. Suppose a vendor normally has invoices ranging from $1,000 to $3,000; suddenly an invoice shows up for $25,000. You may want to investigate this abnormality and can do so using this alert pattern.
Though it is not possible to curb the fraud completely, essential measures must be undertaken to prevent major loss to the business.