Now more than ever before, it is critical to proactively audit vendor statements on a continual basis. The statement audit has always been an integral part of the overall Accounts Payable Recovery Audit, however its importance has been heightened recently.
Historically, approximately 35% – 45% of audit findings relate to duplicate payments. A significant portion of the remaining audit findings are uncovered through the statement audit portion of an Accounts Payable review. In years past, credits would remain on vendor statements for extended periods of time, allowing both internal resources and external auditors the opportunity to effectively audit vendor statements and recover funds.
Today, vendors are quick to write-off credits, applying them to aged, open invoices or applying them to items such as unearned discounts or finance charges, many times within a 90 day period. As soon as application is done, the credits – rightfully due back to your company – are gone forever. The following is an actual excerpt from a vendor statement:
Further complicating this issue is the fact that many vendors have simply stopped sending statements of account. You cannot audit something you do not have!
Off-site and with little to no interruption to your Staff, we implement a continuous auditing process to ensure that credits due back to your organization will not disappear. Not only will you get the bottom line pick-up but we provide meaningful management reports and root cause analysis to help minimize payment errors going forward.
We not only know your vendors, we have contacts within their Accounts Receivable Group. We are highly successful in obtaining statements from vendors because the vendor is requested to send information to a CPA firm, not a recovery audit firm. No one has a better response rate.
Statement Audits involve joining your vendor master file to external databases (USPS, NCOA Database and IRS TIN Matching) for enrichment purposes. We provide you with the cleansed output files.
As with all of our audits, at the conclusion, we will present you with a comprehensive report, including a summary of recoveries along with root cause analysis, our observations and practical recommendations to strengthen your controls and improve your system’s overall effectiveness and efficiency.