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Accounts Payable and Procurement (1)

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  5/14/20131 BRANDON CLINEFELTER CCCS INTERNAL AUDIT MANAGER Internal Controls: Accounts Payable and Purchasing  A Practical Approach Importance of Internal Controls - Make sure we stay on track  - Safeguards against dishonesty and honest mistakes - Keeps our assets safe and our accounting accurate -  Accounts Payable and Procurement are areas subject to asset misappropriation. - Disbursements/misappropriation of assets - Inappropriate purchases - No control is 100% effective all the time - Controls should be linked with others to maximize effectiveness  5/14/20132 Our Experience says…  Every department is different, although the approach is generally the same  Lack of resources can affect the ability to segregate all areas  Mitigating controls need to be carefully considered and documented   All policies and procedures should be documented including departmental roles for ease of review and consideration  One person has sole responsibility for an area because they are “trustworthy”  Supervisors don’t have time, or are unwilling to perform appropriate reviews  “We don’t have enough people or resources to do all of that stuff”  Accounts Payable  5/14/20133 Segregation of Duties –Accounts Payable   Authorization   Vendor Maintenance  Invoice/Pay Request Approval  Check Signing  Recording  Recording Invoices  Recording Credit Memos  Custody/Review    Vendor Change report review   Check Disbursement   Analytical Review   Aging review   Budget to Actual  Vendor Maintenance –Key Controls  Should not also  Record/approve vendor invoices   Authorize/print checks   Authorize/execute wire transfers   Vendor File review   Duplicate addresses for multiple vendors  Employee addresses for a vendor  Multiple vendors with similar names   Vendors compared against the Suspension and Debarment list  Purge of non-active vendors  5/14/20134 Invoice / Pay Request Approval –Key Controls  Should not also  Record vendor invoices   Authorize/print checks  Signature log  Hierarchy for who has approval authority   Spending limit delegation  Updated regularly   Signature considerations  Signed and dated for evidence of approval  If stamp used –physical security   Is delegation appropriate   Approval obtained prior to P-Card purchase Check Signing –Key Controls  Should not also  Prepare bank reconciliations  Review and approve the bank reconciliations  Create the positive pay file for the bank   Responsibility for discrepancies with positive pay file   Vendor considerations  Familiar vendor   Appropriate/srcinal support for payment  Review thresholds  Multiple payments on same invoice
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