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To: Perry Ewing Melissa Zamora
Corporate Treasurer AP Manager
AF Global Corporation AF Global Corporation
From: Jim Gremillion
Sr. Consultant
Accretive Solutions
CC: Tracy Tyler and Matthew Marcinek, Accretive Solutions
Date: 4/2/2014
Re: Audit Report – Duplicate Invoice Payment Audit & Recovery Project
DUPLICATE INVOICE PAYMENT AUDIT & RECOVERY PROJECT
The purpose of this memo is to document the scope, procedures, findings, and recommendations with respect to the
Duplicate Invoice Payment Audit & Recovery Project conducted between Feb 21, 2014 and March 31, 2014.
SCOPE
The scope of the audit composed of identifying and coordinating the recovery of all vendor invoices erroneously paid in
duplicate during the period October 2010 through October 2013. The auditor utilized the ATS software to identify all
possible duplicate invoice payments during the period October 2010 through October 2013. The ATS software
program summarized these possible duplicates within the following categories:
 Inconsistent invoice number for vendor
 Invoice entered in two different formats
 Two different internal companies
 Two different invoice dates
 Two different vendor locations
 Vendor setup twice
 Wrong vendor paid
The total possible duplicate payments during the period totaled 405 items (error cases), equaling $989,137 in
expenditures.
PROCEDURES
The stated audit procedures were as follows:
1) Traced each error case to the respective supporting invoice(s). Reviewed the supporting invoice(s) to
determine if the following data agrees to the payment: a) invoice number, b) invoice date, c) invoice amount, d)
the products and/or services purchased, e) the period of service or purchase date, and f) any specific equipment
serial numbers or contract numbers, noting if any data appears to be duplicated with another payment. Note in
the “Comment” section of the Error Case database the reason the invoice was a duplicate or indicate that it was
not a duplicate.
2) For duplicates identified in step 1 above, obtain a listing of all credit memos processed in QAD issued between
October 1, 2010 and February 1, 2014. Determine if the invoice was detected and corrected within the AP
system.

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3) For any duplicate payment that has already been corrected in the AP system, insert a comment in the
“Comment” column indicating the error was corrected, including a transaction reference for the date. Insert a
"No" next to each line item in the "Duplicate / Incorrect" column.
4) For any duplicate payment that has not already been corrected in the AP system, insert a "Yes" next to the line
item that is an error in the "Duplicate / Incorrect" column and insert a "No" next to the line item that is the correct
invoice payment.
FINDINGS
The following summarizes the findings as of the date of this Audit Report:
Identified duplicates (exceptions) $ 250,370 25%
Identified as not being duplicates or a credit memo
issued (not exceptions) $ 463,657 47%
Intercompany Payments (not applicable) $ 149,049 15%
Total Identified $ 863,076 87%
Missing vouchers $ 56,629 6%
Outstanding error cases $ 69,432 7%
Total Population $ 989,137 100%
The duplicates identified represent 165 of the 405 error cases totaling $250,370. The items are summarized by the
following categories:
Inconsistent invoice number for vendor 4 cases
Invoice entered in two different formats 63 cases
Two different internal companies 2 cases
Two different invoice dates 11 cases
Two different vendor locations 1 case
Vendor setup twice 14 cases
Wrong vendor paid 70 cases
Total 165 cases
Per review of the aforementioned duplicate invoices, the errors can be attributed to the following:
 Key punch errors made by the AP clerk
 AP clerk vouches a document other than the invoice (i.e. past due invoice, faxed copy, receiving ticket, or
vendor statement)
 Vendor submits multiple invoices, which are not identified by AP personnel or system
 AP clerk processes payment for the same invoice within multiple entities
 Duplicate vendors are listed in the AP System
 Multiple remit to addresses are used for the same vendor
 AP clerk erroneously pays the wrong vendor
 Lack of proper AP invoice batch review prior to payment

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The items determined to not be duplicates total 98 error cases, equaling $463,657. Per review of the supporting
invoices, the items were not considered duplicate due to one or more of the following:
 Credit memo applied to the duplicate was processed through the AP System
 Invoices were for different contract dates / service periods
 Invoices had unique equipment serial numbers
 Invoices related to different purchase orders, transport tickets, and/or bills of lading
 Invoice was for partial payment, with another payment completing the total invoice amount
 Vendor uses identical invoice numbers each year
 Different vendors using identical or similar invoice formats
The intercompany category represents 12 error cases equaling $149,049. For these items, the duplicate invoice
payment was made to a division, subsidiary or other internal company of AF Global Corp. As a result, it was not
necessary to pursue recovery.
The missing voucher category represents 67 error cases. For these items, some supporting documentation could not
be located, resulting in the inability to reach a conclusion on the payment.
The outstanding error cases represent error cases in which supporting invoices, vouchers, and checks that could not
be located. These items are pending, as the team continues to search for the missing documentation.
As pdf copies of check vouchers are maintained in the QAD, there is ongoing effort to retrieve these documents.
COLLECTION & RECOVERY EFFORTS
As of the date of this Audit Report, the following summarizes the collections & recovery efforts:
Total Invoices to be recovered $261,065 100%
Invoices scanned into pdf 259,538 99%
Invoices sent to vendor with request for
recovery 250,186 96%
$ 9,352
Resolution reconciled with vendor:
Credit or reimbursement Issued $ 98,648 38%
Credit to be taken by AFG 10,342 4%
Reimbursement check sent to
lockbox $ 35,236 13%
Wrong vendor paid ‐ funds uncollectable $ 9,352 4%
Total Error Cases Closed $ 153,578 59%
COLLECTION & RECOVERY PROCEDURES
1) For all duplicate payments, scan all supporting evidence to pdf files, including invoice and both duplicate
payment vouchers Submit pdf files to respective vendor with Duplicate Invoice Payment Audit & Recovery
memo from Perry Ewing, Corporate Treasurer.
2) Maintain audit recovery database with vendor information:
a) Date of first call to vendor
b) Date of second call to vendor

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c) Vendor contact name, phone number and email address
d) Vendor comments and resolutions
3) Ensure the validity of vendor resolutions
a) Vouch credits issued on previous invoices
b) Vouch refund and reimbursement checks
c) Verify checks that are still outstanding with bank reconciliations
4) Track current credits to be taken and refund reimbursement to be mailed to lockbox
5) Identify all funds deemed uncollectable
RECOMMENDATIONS
We propose the company consider the following best practices and recommendations:
 Ensure proper segregation of duties exists between the authorization, recording, custodial and reconciliation of
the vendor files, purchasing, and accounts payable functions.
 Ensure changes to vendor master data is reviewed and approved in accordance with procedures and
authorization schedules. An edit report of all master file changes should be reviewed on a monthly basis, and
evidence of review should be maintained.
 Ensure a three-way match is performed on all payments, matching supporting purchase orders, receiving
documents, and invoices before payments are batched for processing.
 The AP system should have controls to prohibit invoices from being entered twice
 Payments should only be made against original invoices, not on monthly statements, faxed invoices or invoice
copies.
 Duplicate vendors and vendors with multiple remit to addresses should be reviewed and purged from the
vendor master file.
 AP edit report should be generated and reviewed by the AP Manager for key-punch errors, including invoice
numbers, invoice dates, and correct vendor selected, prior to posting batch for payment..
 AP Manager should manage and distribute batches for data entry, and maintain a log of all batches to be
entered.
PROPOSED SOLUTIONS
 A walkthrough of the entire Purchasing & AP Cycles should be performed by interviewing relevant personnel,
gathering supporting documents, identifying controls and controls deficiencies, and determining if controls are
operating as designed. The processes should be documented thoroughly and reviewed for accuracy every
year.
 Key controls should be documented in a format that provides corroborating evidence and assurance of proper
segregation of duties.
 The Purchasing, Accounts Payable, & Cash Disbursement policies and procedures should be documented and
reviewed annually.
Accretive Solutions Management would appreciate the opportunity to speak with you about the proposed solutions and
continue our professional relationship bringing value added solutions to your company’s business processes.