[Webinar] Fraud in Accounts Payable
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Mary Schaeffer from AP Now identifies 25 ways crooks use to get their hands on your organization's hard earned money. Mary's discussion will include: There’s no such thing as too big or too small. Every company is a potential target.The risk is both internal and external. New types of fraud – some directly affecting accounts payable – are evolving almost daily. View a full recording of the webinar to learn what’s going on and what you should do to protect your company against a group of increasingly sophisticated fraudsters.
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[Webinar] Fraud in Accounts Payable
- 1. Fraud and Other Shenanigans in Accounts Payable 25 Ways Crooks Steal Your Organization’s Money and How You Can Stop Them Mary Schaeffer Publisher & Editorial Director AP Now Author Fraud in Accounts Payable: How to Prevent It + 15 other business books
- 2. Agenda Introduction Invoice Fraud Check Fraud e-Fraud P-card Fraud T&E Fraud Closing Thoughts 2 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 3. Introduction The honest mistake issue It happens at every organization Fraud comes in two flavors 3 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 4. The Good, Bad & Ugly The Good news:You can deter The Bad news: Not a one-time fix The Ugly news: Fraudsters smart and sophisticated Deter, prevent, detect 4 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 5. Invoice Fraud 5 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 6. #1 Phony Invoices Yellow pages ads, copier toner, help- wanted A word about billing notices Items that skirt the law Look like invoices (really) 6 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 7. #2 Inflated Prices Vendors knowingly charge higher prices than agreed to Difficult to prove Solution: 1) Complete Pos 2) Line item matching – automation a big help here Identify vendors 7 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 8. #3 Unauthorized Charges Vendor charges for freight etc. that was supposed to be included Difficult to prove Solution: 1) Complete Pos 2) Line item matching – automation a big help here Identify vendors 8 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 9. #4 Duplicate Invoices Invoices submitted a second time with the intent of getting the customer to pay twice Solution Invoice number control Check for duplicate payment amounts Rely on approver 9 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 10. #5 Suppress Credits Vendor statements with credits suppressed Solution: 1) Use best practices so credits not created 2) Request statements and follow up on a timely basis 3) Hire an audit firm 10 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 11. #6 Checks Intended for Others How: 1) The Master Vendor File Scam 2) The Return to Requisitioner Scam 3) Honest mistake Solutions 1) Good controls on MVF 2) Reports on changes 3) Don’t return checks to requistioners 4) The form for returned checks 11 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 12. #7 The Credit Hold Scam The threat of putting the organization on credit hold unless an invoice is paid NOW Solution: 1) Don’t over react 2) Double check before blindly issuing the payment 3) If payment is made, close the PO and extinguish the receiving docs 12 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 13. Check Fraud 13 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 14. #8 Phony Checks: Your Bank Info Physical Electronic; Internet orders Solution Positive pay for physical checks Daily reconciliations of bank accounts Separate account for refund checks ACH blocks, filters 14 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 15. #9 Same Check; multiple copies Mostly a payroll problem Solution: Positive pay Better Solution: Payee name positive pay Best Solution: No checks – all on direct deposit 15 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 16. #10 Stolen Checks: Payee Name Changed Example of how crooks are getting smarter Solution: Payee name positive pay Direct deposit 16 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 17. Electronic Fraud 17 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 18. #11: Positive Pay Rejects Resubmitted as ACH debits Solution: 1) ACH blocks, filters 2) Daily bank reconciliations 3) of course, positive pay 18 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 19. #12: Unauthorized ACH Transactions Can be debit or credit Several variations Solutions ACH blocks, filters Daily bank recs Separate computer for online banking 19 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 20. #13: Corporate Account Takeovers How they work Solutions Separate computer Careful with attachments Careful clicking on links Careful even with legitimate looking emails Better updating of contact info 20 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 21. #14: Ridiculous e-mails The ones that scream scam Solutions Obviously, don’t respond DO NOT CLICK ON ANY LINK IN THEM – just to see 21 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 22. #15: Serious Looking Emails Examples Includes NACHA, FBI, Feds etc. Your ACH payment has been returned Looks like it came from your bank Solutions Keep contact info updated – and verify separately Don’t click on anything! Separate computer 22 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 23. #16: Change of Bank Account Request Variation on the change of Remit-To address request Solutions Verify separately Get contact info when setting up master vendor file Keep contact info updated 23 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 24. P-card Fraud 24 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 25. #17: Unauthorized Spend Could be for personal use Could be for items not authorized Solutions: Guidelines - detailed Cardholder agreement Manager review 25 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 26. #18: Charges just under the Limit Trying to get around authorization limits Trying to get around other restrictions Solution Detailed policy Run reports identifying such charges Talk with purchaser and/or sup 26 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 27. #19 Spending by Terminated Employee 100% preventable! Solution: 1) Get card back 2) Immediate notification by HR 3) Cancel card at bank ASAP 27 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 28. T&E Shenanigans 28 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 29. 20: Outlandish Spending $800 leather skirt $300 bottle of wine $50 steak etc. Solutions: 1) Detailed policy setting guidelines 2) Make managers responsible 3) Warnings 29 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 30. #21: Adding a Gift Card Newest T&E fraud Solutions: 1) Detailed receipt 2) Refuse to pay 3) Level 3 data – if T&E combined on p-card 30 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 31. #22: Going the Extra Mile Submitting extra miles for reimbursement Solutions: 1) reasonableness 2) Mapquest etc. to estimate 3) Feature in newest T&E software 4) Make managers responsible 31 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 32. #23 Double Dipping Submitting an expense twice Same receipt T&E, invoice, p-cards Solutions (not easy) – same amount on different reports The 14-month search Duplicate payment audit – might find Manager review Question items paid out of the norm 32 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 33. #24: Personal Guests Client or significant other? IRS Guidelines Solution - partial 1) Detailed receipts 2) Manager’s oversight 33 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 34. #25: Employees’ Eat out on Employer’s Dime How? Lower level employee submits the bill Solution Strict guidelines Higher level employee submits No one approves a function they attended Automated T&E 34 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 35. Closing Thoughts Crooks creative Stay on top of the issue Detailed policy, strong internal controls, appropriate segregation of duties and automation will help prevent and detect many frauds. 35 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 36. 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 36 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 37. About Mary Schaeffer 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://apnow.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. 37 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.apnow.com) a fee-based newsletter published by CRYSTALLUS, Inc. She can be reached at marys@ap-now.com © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer
- 38. “75% of enterprises use a fully manual indexing and approval process.” – Aberdeen Group It’s time to Let Go and Gain Control. Automate your Accounts Payable. Visit http://www.anybill.com/ today! 38 © 2012 Accounts Payable Now & Tomorrow and Mary S. Schaeffer