[Webinar] AP Efficiency: It's All In The Controls

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Not only is the accounts payable department responsible for paying an organization’s bills, it is charged with only paying them correctly. This means guarding against duplicate payments as well as fraud. As those who work in or manage accounts payable are painfully aware, this is easier said than done. The cornerstone to an efficient, effective department is in the controls. Recognizing the importance of this topic to the accounting and accounts payable community, Anybill invited Mary Schaeffer, a nationally recognized accounts payable expert, to discuss this topic in detail.

Ms. Schaeffer covered the following issues:

Why every organization needs to concerned about controls
Common control problems and weaknesses many organizations experience
Solutions that will strengthen your controls.

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[Webinar] AP Efficiency: It's All In The Controls

  1. 1. Accounts Payable Efficiency: Its All in the ControlsMary SchaefferPublisher & Editorial Director AP NowAuthor Controller & CFO’s Guide to AccountsPayable + 15 other business books
  2. 2. Agenda  Background  Control Problems  Solutions to Control Issues  Closing thoughts © 2012 Accounts Payable Now & Tomorrow and2 Mary S. Schaeffer
  3. 3. Background © 2012 Accounts Payable Now & Tomorrow and3 Mary S. Schaeffer
  4. 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 and4 Mary S. Schaeffer
  5. 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 and5 Mary S. Schaeffer
  6. 6. Control Problems © 2012 Accounts Payable Now & Tomorrow and6 Mary S. Schaeffer
  7. 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 © 2012 Accounts Payable Now & Tomorrow and7 Mary S. Schaeffer
  8. 8. Password Sharing • Sign of weak internal controls • a few places: Firing offense • What about short vacations • A better approach © 2012 Accounts Payable Now & Tomorrow and8 Mary S. Schaeffer
  9. 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 and9 Mary S. Schaeffer
  10. 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 © 2012 Accounts Payable Now & Tomorrow and10 Mary S. Schaeffer
  11. 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 and11 Mary S. Schaeffer
  12. 12. A Word about Management Overrides  Fix records  Journal Entries  Backup documentation  Double sign off  Can be fraud problem © 2012 Accounts Payable Now & Tomorrow and12 Mary S. Schaeffer
  13. 13. Promoting from within  Great move  What about their system access??  How you know you have the problem © 2012 Accounts Payable Now & Tomorrow and13 Mary S. Schaeffer
  14. 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 © 2012 Accounts Payable Now & Tomorrow and14 Mary S. Schaeffer
  15. 15. 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 and15 Mary S. Schaeffer
  16. 16. Control Solutions © 2012 Accounts Payable Now & Tomorrow and16 Mary S. Schaeffer
  17. 17. Newest Approach Policy of Zero Tolerance  Fraud  Policy abuse  Ethical breaches  Fire  Prosecute © 2012 Accounts Payable Now & Tomorrow and17 Mary S. Schaeffer
  18. 18. 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 and18 Mary S. Schaeffer
  19. 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 and19 Mary S. Schaeffer
  20. 20. Make Managers Responsible  Look before they sign  Consequences  Firing - rare  Part of annual review © 2012 Accounts Payable Now & Tomorrow and20 Mary S. Schaeffer
  21. 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 and21 Mary S. Schaeffer
  22. 22. Centralize Receipt of Invoices  One snail mail address  AP  bank  One email  Invoices@  AP@  One fax  In AP for invoices only  E-Fax © 2012 Accounts Payable Now & Tomorrow and22 Mary S. Schaeffer
  23. 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 © 2012 Accounts Payable Now & Tomorrow and23 Mary S. Schaeffer
  24. 24. Standardization Everything related to invoice processing:  Procedures  Written policy and procedures manual  Data entry  Invoice numbers  Addresses  Names  Punctuation © 2012 Accounts Payable Now & Tomorrow and24 Mary S. Schaeffer
  25. 25. 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 and25 Mary S. Schaeffer
  26. 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 and26 Mary S. Schaeffer
  27. 27. Big Benefit Strategic – Accounts Payable automation frees you and your staff from mundane tasks, giving you more time to focus on your business. © 2012 Accounts Payable Now & Tomorrow and27 Mary S. Schaeffer
  28. 28. AP: Yesterday vs. Tomorrow © 2012 Accounts Payable Now & Tomorrow and28 Mary S. Schaeffer
  29. 29. How You Can Get Started  Talk to peers  Vendor demos  Ask Anybill  Email: info@anybill.com  Call: 877-426-9245 © 2012 Accounts Payable Now & Tomorrow and29 Mary S. Schaeffer
  30. 30. Thank you/Questions Questions always welcome. To share your thoughts and insights Mary Schaeffer  marys@ap-now.com  302 836 0540  Sign up for our free weekly ezine at www.ap-now.com/ezinesignup.html © 2012 Accounts Payable Now & Tomorrow and30 Mary S. Schaeffer
  31. 31. 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 marys@ap-now.com © 2012 Accounts Payable Now & Tomorrow and31 Mary S. Schaeffer
  32. 32. © 2012 Accounts Payable Now & Tomorrow and32 Mary S. Schaeffer

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