So you’ve tackled one of the five largest administrative expenses incurred annually – telecommunications. What about everything else that you purchase? Inventory and other cost of sales components, office supplies, utilities, and the related sales tax liabilities? Non-payroll costs comprise tens of thousands of individual purchase/payment transactions, often with weak controls over the authorization, approval and reconciliation of those payments.
According to the Wall Street Journal – “accounts payable losses have risen 30% in each of the past two years and may run over $10 billion annually..” The Wall Street Journal went on to state that “cutbacks and computerization have cost companies billions of dollars in overpayments, sparked conflicts with vendors and opened the door to fraud…Companies don’t always catch these errors, which are hidden in mountains of paperwork.”
Profit Recovery Systems’ Accounts Payable audit practice has recovered tens of millions of dollars in overpayments for our clients over the past 15 years.
Financial management needs to be aware of the inherent risks within their high volume, high turnover, accounts payable environment where it’s a fallacy to assume that system controls will catch all overpayment errors.
Historical Payments Audits
We Approach Prospective Clients with these Questions:
- Does your accounts payable software identify all potential duplicate payment and overpayment occurrences?
- Can data entry errors result in overpayments which are undetected by your staff and accounts payable software?
- Could a single vendor have multiple vendor numbers assigned to it within your accounts payable system?
- Are returned materials and other credit memorandums properly captured and processed within your accounts payable environment?
- Do your employees have sufficient time to investigate and resolve all overpayment and duplicate payment issues?
Profit Recovery Systems can provide you with the accounts payable expertise needed to answer these questions. We staff our client engagements with professionals who are focused, dedicated and experienced in the review of accounts payable history and the recovery of all overpayment errors. We utilize a “business approach” in the pursuit of our clients’ overpayment errors and are highly sensitive to the importance of maintaining or improving supplier relationships.
We provide a comprehensive analysis of all overpayment errors along with practical recommendations to eliminate the future occurrence of similar errors. Our services are provided completely on a “contingency basis”; if we do not recover any overpayments, we are not paid.
Our dedicated Accounts Payable audit staff has decades of experience reviewing our clients’ purchase contracts and designing and executing work programs to ensure that suppliers are following every provision. We research and assemble claims for billing errors and conduct a “cradle-to-grave” pursuit of each claim with the supplier until it is resolved.
PRS offers a suite of accounts payable fraud detection tests which are performed and presented in combination with our “contingency based” review of your accounts payable history, or which can be run as a standalone project.
These fraud tests are designed to identify indicators of potentially illicit activity; however, our tests also identify potential weaknesses within a client’s processes and control environment surrounding the “Procure-to-Pay” transaction cycle. In addition, our tests often identify vendors whose activity, while perhaps not fraudulent, has a high likelihood of resulting from some form of undesirable activity or potential conflict of interest.
Our analysts will enhance your staff to facilitate analysis, assist with implementation, or simply provide extra manpower on any internal audit or financial analysis project.