David Macleod presented on his use of IDEA software to analyze Falkirk Council's payment data to detect duplicate invoice payments. Over the past 4 years, IDEA analysis identified 283 duplicate payments totaling £211,057. In the current fiscal year through October, 50 duplicates totaling £51,017 were found. IDEA allowed comprehensive matching of payment records to detect non-exact duplicates that may have otherwise gone unnoticed.

1. Duplicate Invoice Payments
David Macleod
Internal Auditor
Falkirk Council
4 December 2014 IDEA Scottish User Group 1

2. Outline of Presentation
• Background
• Risk
• Data
• Use of IDEA
• Findings
4 December 2014 IDEA Scottish User Group 2

3. • Around 7,000 employees across the Chief Executive’s Office and four
Services:
– Corporate & Neighbourhood;
– Development;
– Education; and
– Social Work
• Supports Falkirk Community Trust
The 2014/15 budgets for the Council are as follows:
• Revenue Budget = £329,354,000
• General Capital Programme = £21,170,000
• Housing Revenue Budget = £54,434,000
• Housing Capital Investment = £36,533,000
• (The council has a housing stock of approximately 16,000 properties.)
4 December 2014 IDEA Scottish User Group 3

4. Background
• Integra Finance System
– Used by Falkirk Council since 2005
– 800+ users throughout the Council and Falkirk
Community Trust
– Users have different permissions (e.g. read only, data
entry, approval)
– Various integrated modules including ledger,
purchasing and creditors
– Payment files are generated via the creditors module
– Payment runs every Monday, Wednesday and Friday
4 December 2014 IDEA Scottish User Group 4

5. Extract from Falkirk Council Financial
Regulations (Section 15.5)
The Officer certifying an invoice or other payment must be satisfied that:
• The goods or services have been received and are of the agreed quantity and
quality;
• The invoice price matches the agreed price;
• The arithmetic is correct including discounts, credits, and VAT;
• Appropriate entries have been made in inventories or stock records;
• The invoice has not previously been authorised for payment;
• The invoice is in the name of Falkirk Council (or an integral part of it); and
• The invoice is a proper liability of the Council.
4 December 2014 IDEA Scottish User Group 5

6. Extract from Falkirk Council Financial
Regulations (Section 15.6)
• “Care must be taken not to make duplicate
payments, especially if the invoice is a fax,
copy invoice, or photocopied invoice.
Payments must not be made on the basis
of supplier’s statements.”
4 December 2014 IDEA Scottish User Group 6

7. Risk
• Reasons for duplicate creditor payments
– Paid to incorrect suppliers
• e.g. Emergency Planning College instead of Emergency
Planning Society; or
• Scottish Power instead of Scottish Gas.
– Payments made on copy invoices or delivery notes
– Paid to the same (correct) supplier twice
4 December 2014 IDEA Scottish User Group 7

8. Examples of Non-Exact Invoice Numbers
• VP69181270M12101 and VP69181270M12101NK
• 3360416025 and 3360416025-12.08.13
• C4053534 and 4053534
• S671 and S671A
• OP/IO69386 and OP/1069386
• 90005973 and 90005973-
• 313 and 3113
• 36100000617 and 3610000617
• 31025. and 31025
4 December 2014 IDEA Scottish User Group 8

9. How it was known that duplicate
payments were occurring
• Contact (and reimbursement) from suppliers
• Checks by Creditors team on exact matches
This resulted in:
• Concern that some duplicate payments were not
being detected
4 December 2014 IDEA Scottish User Group 9

10. Payments File Report
• Creditor Reference
• Supplier Reference
• Internal Number
• Location
• Invoice Date
• Due Date
• Payment Date
• Gross
• VAT
• Payment Method
• Payment Reference
• Narrative
• Supplier code on Integra
• Invoice number
• Unique reference
• Section / establishment
• Total amount of invoice
• VAT amount
• BACS or Cheque
• Details of invoice
4 December 2014 IDEA Scottish User Group 10

11. 4 December 2014 IDEA Scottish User Group 11

12. Data
• 10,000+ active suppliers on supplier database
• Annual volume of payments via Integra =
170,000
• Annual net value of payments via Integra = £278
million
• A rolling 12 month period is reviewed each
month
4 December 2014 IDEA Scottish User Group 12

13. Use of IDEA
• Run payments file report on Integra
• Import to IDEA using Report Reader
• Join payment file with Active Suppliers to identify
supplier name
• Join combined file with Locations to determine
location description
4 December 2014 IDEA Scottish User Group 13

14. IDEA – Duplicate Key Detection
• Apply the duplicate key detection function based
on:
– Invoice date and gross amount
[approximately 60,000 results];
– Supplier reference and gross amount
[approximately 1,500 results]; and
– Supplier reference (as numeric format) and gross
amount
[approximately 58,000 results].
4 December 2014 IDEA Scottish User Group 14

15. 4 December 2014 IDEA Scottish User Group 15

16. IDEA – Duplicate Key Detection
• Review results and copy any potential duplicates to a spreadsheet.
• Split the file into various value ranges by applying a criterion of
Gross amount is greater than x and is less than y.
• Look for duplicates where at least one payment is in the most recent
month.
• To convert supplier reference field to numeric format use field
manipulation to append a column and apply the formula @Val
(Supplier Reference). Apply the duplicate key detection using this
appended column and gross amount.
4 December 2014 IDEA Scottish User Group 16

17. Value Ranges
• £0.00 to £100;
• £100 to £200;
• £200 to £300;
• £300 to £400;
• £400 to £500;
• £500 to £1,000;
• £1,000 to £2,000;
• £2,000 to £3,000;
• £3,000 to £4,000;
• £4,000 to £5,000;
• £5,000 to £10,000;
• £10,000 to £20,000;
• £20,000 to £50,000; and
• Over £50,000
4 December 2014 IDEA Scottish User Group 17

18. 4 December 2014 IDEA Scottish User Group 18

19. Duplicate Invoices
• Check the identified duplicates to Integra for credit notes or refunds.
• Obtain copies of the invoices from the Creditors section for the remaining duplicates.
• Review the invoices to determine if the payments are, in fact, duplicates.
• Check with the Creditors team whether they are aware of any of the remaining
duplicates and are in the process of recovering them.
• Report the remaining duplicates to Finance.
• Provide copies of the relevant invoices to the Creditors team to enable recovery
action.
• Record the details of all reported duplicates on a spreadsheet and check to ensure
that these duplicates are being recovered. Recovery is normally via credit note or by
refund.
4 December 2014 IDEA Scottish User Group 19

20. Findings
• Since October 2010, a total of 283
duplicates (to October 2014) have been
identified.
• Cumulative gross value = £211,057
• For 2014/15 (to October 2014), a total of
50 duplicates have been identified.
• Cumulative gross value = £51,017
4 December 2014 IDEA Scottish User Group 20

21. Year Number of
Duplicate
Payments
Cumulative
Gross Value
To 2010/11 14 £42,804.53
2011/12 46 £33,038.48
2012/13 85 £41,304.17
2013/14 88 £42,892.80
2014/15 50 £51,017.03
Total 283 £211,057.01
4 December 2014 IDEA Scottish User Group 21

22. Duplicate Payments
• Almost all duplicates have been recovered.
• As at 1 December 2014, only 11 recently
reported duplicates are still outstanding.
• If necessary, the Creditors team provide
additional training to Integra users who have
processed the duplicate payments.
• To avoid duplication, the Creditors team have
stopped conducting their own checks.
4 December 2014 IDEA Scottish User Group 22

23. Duplicate Payments
• COSLA and the Scottish Government
recently provided with details of the
process followed at Falkirk Council.
• This is an example of an activity that can
help to improve the detection of fraud and
error at relatively low cost.
4 December 2014 IDEA Scottish User Group 23

24. Conclusion
• A value adding activity that has resulted in
the recovery of more than £200,000 of
expenditure that would otherwise have
been lost to Falkirk Council.
4 December 2014 IDEA Scottish User Group 24

25. Thank you
and
Any Questions?
4 December 2014 IDEA Scottish User Group 25