Be aware of how accounts payable could be deceitful. Being knowledgeable on such situations could prepare you before it threatens the company.

1. Ways to Identify
ACCOUNTS PAYABLE
FRAUD

2. Internal accounts payable controls is quite the tedious tasks but upon
doing such measures the results are worth the effort and could
foresee fraud or leakages before it threatens the business.

3. These few approaches is a combination of data mining and
programming capability but the implementation is satisfactory and
fairly straightforward.

4. Duplicate Payments
. Implement some fuzzy-matching
Rounded-Amount Invoices
Invoices just below approval amounts
Check Theft Search

5. Duplicate payments may not be considered
as fraud-related, but continue to be a
significant A/P leakage which could be
prevented and recovered.
Duplicate Payments

6. Duplicate Payments
For some it may not be much but if the corporation A/P invoices accumulates a total
of $75 million and the duplicate payments could be around $1.5 million.
2%
states that corporations makes around
DUPLICATED PAYMENTS.

7. Solution
Acquire software packages to handle duplicated
invoices though this may still be vulnerable to duplication
due to an addition of a single letter among the information
added will lead to duplicated transaction.
Duplicate Payments

8. The programmer will then handle the limitation through code
creation to join tables and match data through ids then
retrieve the results for A/P invoice duplication.
Duplicate Payments
Ask a programmer

9. It would be best to implement “similar” fuzzy-matching
than an exact matching.
Implement some fuzzy-matching

10. Implement some fuzzy-matching
Striping out the zeros, any alphabetic characters as well as
punctuation characters
Invoice number

11. Invoice Date
Implement some fuzzy-matching
For effective use of such method, we recommend on
using setting it to 21 days to fully catch duplicate
payments made 3 weeks apart.
Date difference is between less than the designated amount
such as 7 days

12. Amounts are considered similar if it is under
these three criteria:
Implement some fuzzy-matching
 If the amount is 5% +/- than the other amount
 If an amount is exactly twice the amount as the other,
i.e. $220.15 and $440.30
 If the amount has the same first 4 digits, i.e. $123.45
and $1,234.55

13. Conclusion:
Implement some fuzzy-matching
It would be ideal to use similar matching in the invoice
number, date, and amount fields when conducting a
payment audit. This will assure you of a shorter and
more accurate report.

14. Rounded-Amount Invoices
It was found that frauds could be done through rounded
amounts, these are invoices without pennies.

15. Rounded-Amount Invoices
One trick you could do is by using the function MOD in
excel. The function MOD could tell whether the amount is
rounded invoices by giving a result of 1 if the amount is in
decimal format and 0 if it is a rounded-amount.
Sample: MOD(150.17,1) which will result to 1 indicating an amount with decimals.

16. Rounded-Amount Invoices
Rank the vendors according to the percentage of the rounded-
amount invoice.
• To do this, simply add up the
vendors’ number of rounded-
amount invoices then divide the
sum to the total number of
invoices for that vendor.
Sum of vendors’ number of
rounded-amount invoice /
total number of invoices of the
vendor
 Then rank it by descending order to review the most suspicious vendors first.
N%=

17. Invoices just below approval amounts
Suppose an A/P clerk knows the different dollar threshold for the
management approval.
A good example would be, If the supervisor would only accept invoices exceeding an
amount of $3,000 or less, while the manager could allow to approve invoices of
$10,000 or less. A good situation would be, when the manager or the supervisor
tries to skim off extra money. This could be done by creating an invoice just below
the approved level of amount.

18. Invoices just below approval amounts
This kind of suspicious activity could be tracked through a simple
method of having a 3% (or less) than the approval amount to be
identified.
For example if the approval amount is $3,000, then if the invoice is between $2,910 and
$2,999. This could be flagged as suspicious and consider as an anomaly

19. Check Theft Search
Identify discrepancies among the accounts payable monthly bank
statement.

20. Check Theft Search
 Missing check number or gaps in reconciled checks numbers.
 Determine this by checking number is not sequential with reference to the ‘*’ or
‘#’
 Check it through merging your check register, A/P file, and back statements to
together.
Identifying discrepancies through:

21. Check Theft Search
 Upon doing so will lead to identification of stolen checks.
 If possible, check the OCR (Optical Character Recognition) abilities, to be able
to identify the actual payee.
Identifying discrepancies through:

22. Check Theft Search
As presented, you have 3 data bases describing 1 activity at
hand. Upon the presence of these data, the programmer will
be in charge of joining the tables to get the needed
information.

23. Check Theft Search
Then, use the unique numbers and merge it in the 3 data
sources and compare these details: payee, check amount,
check date. Now, identifying the checks will be easy through
this created technique.

24. Be safe and be aware of your accounts payable. If situations such as
these could not be handled by the in-house team, it would be best to
ask assistance from an outsourced accounting services.

25. Your trusted outsourced accounting provider in the Philippines. Give
them a visit here: http://www.infinitaccounting.com/