Top 5 questions to determine your company's risk of AP fraud

Adopt best practices and gain the upper hand in preventing fraud

As you read through the Q&A, ask yourself whether your company has the time, resources, technology or in-house expertise to perform an analysis of your vendor risk and implement the controls needed to stop risky vendors from entering your supply chain.

Fraud Risk
1. Do you have an internal risk assessment program that detects accounts payable fraud risk?

Yes

You are on the right track. Consider the frequency of your review and whether you know how to mitigate issues you uncover.

No

It is important to take action sooner rather than later. The Association of Certified Fraud Examiners’ Global Fraud Survey shows the median duration of a fraud scam is 18 months, and almost a third last at least two years before being discovered. Billing schemes and check tampering schemes posed the greatest risk based on their relative frequency, with median losses of $100,000 and $158,000, respectively. You don’t want to become a victim.

Prohibited Entities
2. Do you verify your vendors against prohibited entity listings (OFAC, BIS, US State Dept., FBI, OSFI, UN Sanctioned, EU Sanctioned, World Bank, Interpol, Bank of England, etc.)?

Yes

It’s great that you have adopted a prohibited entity check. Are you looking at all available listings to protect your company globally? Do you know how to interpret or validate the information you uncover? As you may have experienced, flagging issues is only half the battle. You need to know how to minimize the noise of false positives and focus your attention where it matters most. That’s where APEX Analytix can help.

No

Your organization could be doing business with terrorists, criminals, fraudsters or suppliers that represent a reputational risk. You might also be leaving your operations open to fines. Our team offers the expertise and tools you need to verify vendors and protect against unnecessary risks.

Not Sure

You have come to the right place. In making that decision, you should consider, not only detecting if you are doing business with possible prohibited entities, but have experts narrow down the vendors you should further investigate. Our team offers these expertise and gives you the next steps your organization can take to confine the issue.

Outliers
3. Do you monitor for outlier invoices or transactions exceeding typical amounts for the vendor?

Yes

It’s good that you recognize the need to monitor your spending. Can you also determine which vendors show signs of a greater, lurking problem? Having the ability to identify vendors with high-risk invoice and vendor characteristics provides a more holistic view of where your risks truly are.

No

Identifying a dramatic increase in spend from one period to the next can give you the chance to stop a leak before it becomes a flood. You can uncover potential overcharges, unnecessary spending, intentional or unintentional errors and fraud scams that can erode your bottom-line.

Unrelated Vendors
4. Do you check for unrelated vendors operating from the same address or with similar vendor record content?

Yes

You’ve likely discovered that ongoing vendor master clean-up can be overwhelming when you have large volumes of data and multiple ERP systems. Duplicate vendors exist in almost every vendor master; but being able to decipher between legitimate relationships and those that are not can be a challenge.

No

You may want to reconsider and begin checking for vendor master overlap and discrepancies. The ACFE Fraud Study shows that corruption (i.e., conflicts of interest, bribery, etc.) accounts for at least 20% of fraud cases in every department, but is a particularly high risk in purchasing (almost 70% of cases).

Major Events
5. Have you had any recent mergers, acquisitions or system conversions?

Yes

Changes in your organization often come with multiple ERP systems and duplicate vendor records that can expose you to processing inefficiencies, payment errors and fraud. It’s a great time to assess your risk and to identify areas where vendor master cleanup could reduce your exposure.

No

Now is the time to be proactive in identifying potential areas of risk and fraud – before an influx of new vendors or growth in your business.