- Standard accounts payable policies manual#
- Standard accounts payable policies verification#
- Standard accounts payable policies software#
This means that any signature plates or stamps should also be stored in a locked location.
Otherwise, checks can be stolen and fraudulently filled out and cashed. Unused check stock should always be stored in a locked location. By doing so, there is a cross-check on the issuance of cash. One person should prepare checks, and a different person should sign them. The bulk of the controls noted below pertain to payment by check, since that is still the predominant form of payment. If a supplier invoice was incorrectly charged to the wrong department, it is possible that a department manager perusing the financial statements would detect a disparity between the amount charged and the budget, and so would bring the issue to the attention of the accounting department. The same problem arises with dashes in an invoice number an invoice number of 1234-999 could be recorded as 1234-999 or as 1234999. For example, do you record invoice number 0000078234 with the leading zeros or without them? If the same invoice is presented to the payables staff twice, and it is recorded as 0000078234 one time and 78234 the next time, the system will not flag them as being duplicate invoices. However, there can be inconsistency in how invoice numbers are recorded.
Standard accounts payable policies software#
This would not appear to be a problem, since most companies use accounting software that automatically detects duplicate invoices and prevents duplicate payments. Perhaps the largest problem in the area of payables data entry is duplicate payments. This control works best where purchase orders have already been used to authorize a purchase. This control places greater priority on paying suppliers than it does on obtaining authorizations to pay, since every invoice received is recorded in the payables system at once. This control forces the accounts payable staff to verify the approval of every invoice before entering it into the system. There are several ways to ensure that all supplier invoices have been entered in the accounts payable system, though these controls have varying degrees of success. In many situations, the volume of incoming supplier invoices makes this so difficult that the payable staff abandons any attempt to identify duplicate invoices, and simply accepts that it will occasionally pay for such items. In this case, the payables clerk can search through the vendor file and unpaid invoices file to see if an invoice just received from a supplier has already been paid.
Standard accounts payable policies manual#
This is a much more difficult endeavor in an entirely manual accounting system. Manual Duplicate Payment SearchĪ computerized payables system conducts an automatic search for duplicate invoice numbers. However, it is also painfully slow and can break down if there is missing paperwork. It is also better than approving only based on the purchase order, since it also verifies receipt of the goods. This approach supersedes the need for individual invoice approval, since approval is based on the purchase order instead. The payables staff matches the supplier invoice to the related purchase order and proof of receipt before authorizing payment. Since this control entails a considerable amount of work by the purchasing staff, they will likely ask employees to request items on a formal purchase requisition form. By doing so, the purchasing staff is, in essence, approving all expenditures before they have been made, which may prevent some expenditures from ever occurring. The purchasing department issues a purchase order for every purchase made. This approach gives reviewers a very complete set of information to work with. Consequently, it is better to have the payables staff first assemble the supplier invoice, authorizing purchase order, and receiving documentation into a packet, and then stamp the invoice with a signature block that includes the account number to be charged, and then have the approver review it.
The approver may also want to know which general ledger account will be charged.
However, this is actually a relatively weak control if the approver only sees the supplier invoice, since there is no way to tell if the goods or services were received, or if the prices being charged were what the company originally agreed to. The person in a position to authorize payment signifies his or her approval of a supplier invoice.
Standard accounts payable policies verification#
The verification of obligation to pay can be accomplished through one of several possible controls. The controls are as follows: Obligation to Pay Controls Payables controls are aggregated into three general categories, which are verifying the obligation of the business to pay, entering the payables data into the computer system, and paying suppliers. What are the Controls for Accounts Payable?Īccounts payable controls are used to mitigate the risk of losses in the payables function.
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