Controls for Accounts Payable (#13)
/In this episode, we discuss the controls associated with accounts payable. There are many possible controls that may be used, but the accountant needs to be aware that employing all of them could seriously reduce the overall efficiency of the department. Key points made in the podcast are noted within the following general classifications:
Manual Controls
Install three-way matching for larger expenditures
Institute a duplicate invoice search
Store unpaid invoices by date, to ensure that those items to which early payment discounts apply will be paid on time
Roll out negative approvals, to streamline the invoice approval process
Store blank check stock in a locked location, to prevent theft
Restrict access to the signature plate
Maintain a log of all checks that have already been used, to spot illicit removals
Review supporting documents before signing checks
Limit the number of check signers to a small number of rigorous signers
Never sign blank checks
Perforate cancelled checks, to keep them from being submitted for payment
Computerized Controls
Conduct automated three-way matching
Automatically scan for duplicate invoices
Lock down access to the supplier master file, so that no one can alter pay-to addresses
Track changes that have been made to the supplier master file
Adopt a standard naming convention for suppliers in the supplier master file, to prevent the creation of duplicate supplier records
Scan the supplier master file for duplicate supplier records
Compare supplier to employee addresses to see if there are any matches
Install the positive pay system
Electronic Payments
Install an ACH debit filter to restrict deductions from a bank account
Minimize the amount of cash in the checking account to cover just current liabilities, to minimize the risk of large additional charges being made against the account
Install password access to the electronic payment software
Have the bank call the CFO or controller for verbal approval of large electronic payments
Review repetitive payments on a regular basis, to ensure that they are still valid
Related Courses
Accounting Information Systems