ASSOCIATED RISKS:

1. Data is entered into the system incorrectly.
2. Employees circumvent the system and approve a check that was in error.
3. A/P documents are misfiled, out of file, lost, destroyed or unavailable for what ever reason.
4. Complication of contractual agreements that prevent A/P from accurately approving invoices or approved when errors exist. Including:
   • Volume dollar discounts
   • Unit discounts
   • Select item rebates
   • Contract allowance issues
   • Payment processing errors
   • Payment application errors
   • Invoice price/cost errors
   • Product return errors
   • Rebate program application errors
   • Freight errors
     • Freight shipping error, collect freight added to invoice, unauthorized freight carrier, excess freight-back orders, freight rate charge error, unauthorized pallet/container charges, unauthorized air freight, unauthorized up-charge, etc.
5. Checks written to un-approved vendors.
6. Duplicate checks written for the same invoice.
7. Management approving checks without documentation, such as the P.O., receiving documents, contractual agreements and invoice.
8. Incorrect data received from dock personnel that effects A/P and inventory.
9. Multiple employees require access to files simultaneously.
10. Files need to be available to all authorized employees in remote locations.
11. Remote sites mishandling the entry of P.O.?s.
12. Improper payment of invoice caused by manual input or mishandling prior to payment.
13. Volume of invoices creates backlog resulting in payment errors and lost discounts.
14. After Pre-Audit is complete, an error is created by circumventing the system.

CONTROL ACTIVITIES:

1. Automatically enter all A/P documents with scan or an e-Portal process.
2. Automatically prevent employees from approving checks that have errors.
3. Automatically provide image files for review with proper authority.
4. Automatically provide pre-audit task comparing P.O.?s, receives, invoice and contractual agreements.
5. Automatically route check to correct vendor file for printing.
6. Automatically audit the invoice vs. all documents such as the P.O., receivers, contractual agreements, and the invoice prior to check writing.
7. Automatically provide management with the ability to review all documents prior to approval of checks. (P.O., Receiving data, Invoice, vendor profile).
8. Automatically manage receiving documents.
9. Automatically provide the ability for all approved personnel to view documents with proper inquiry authority.
10. Automatically make A/P files available with proper security levels via a secure VPN.
11. Automatically allow remote sites to enter Purchase Order?s under system control with authority level.
12. Automatic input of all data.
13. Automated input of invoices eliminates backlog problem.
14. Automatic transfer of transaction data to a virtual post-audit system for complete review.

INFORMATION AND COMMUNICATION:

• Provide access to all A/P documents with proper inquiry authority. Remote access via a secure VPN.
• Maintain files as long as necessary for auditing purposes.
• Allow the Vendor Management System to automatically review all Vendor terms, enabling application of those terms to the invoice tendered.
• Provide virtual post audit capability.

MONITORING:

• Pre Audit is the automated monitor that ensures correct procedures have been followed and applied.
• All documents are accessible with proper inquiry authority.
• Virtual Post Audit ensures that no transactions were circumvented after the pre audit was completed.