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Accounts Payable Recovery Audit Uses the Wrong Yard Stick

on March 28, 2019

Accounts payable recovery audits are common practice to identify losses that ERP systems fail to catch. But does a recovery approach use the right yard stick to measure ROI?

Consider an enterprise with $5B in spend and recoveries of $250,000. At surface level, it looks like this company’s process is working; they found recoverable funds post payment. However, when you dig deeper you see that they were only able to recover the low-hanging fruit—in most cases, the obvious duplicate payments that are most easily recovered.

If your yard stick is duplicates, that’s all you’re going to find. There’s a lot more to controlling your spend risk. What about the off-cycle payments? Or a payment to a fictitious vendor? These are risks that accounts payable recovery approaches miss.

What accounts payable audits recover does NOT equal what is lost

The misconception with an accounts payable recovery approach is that what is recovered is what was lost. In the example above, the company is lacking visibility into their full spend risk. 

To cover your full spend risk, your procure-to-pay process needs to include monitoring transactions continually across multiple, disparate source systems for cash leakage, fraud, and misuse. You need constant pre-payment and post-payment analysis to flag anomalies that warrant further investigation in real-time. For instance, an invoice submitted to AP that also gets charged to a purchase card or p-card charges that are duplicated as travel expenses.

How to gain visibility into your full spend risk

It takes process change and the right tools to control your full spend risk. Today, finance leaders have a huge opportunity to transform audit and risk management processes with AI-powered technology that is purpose-built to monitor the gaps that exist in your controls.

Oversight’s audit and risk management platform enables your organization to identify spend risk no matter where it resides in your enterprise. Our AI-powered platform looks across spend categories–whether T&E, P-Card, Payables, Procurement, or General Ledger–to identify and prioritize risks and take action at the right time for each transaction.

Instead of the traditional approach of waiting for auditors to perform testing long after payables and procurement transactions have taken place, the platform immediately signals a problem. This gives you real-time oversight of your ERP processes so you can avoid mistakes before they happen.

Ready to learn more about eliminating payables risk?

Download the Explore the Power of Prevention with Insights On Demand for Procure-to-Pay webinar to learn how to strengthen your protection against fraud and improper payments with real-time accounts payable monitoring.


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