Posted by Steve Wilcox on Fri, Mar 06, 2009 @ 10:59 AM
Yup, that's an outhouse.
What if you used Google Maps to view a vendor address and it turned out to be an outhouse?!? Alarm bells would probably go off in your head that an unscrupulous "vendor" was trying to swindle your company.
Nat Goodman used this outhouse example in this past week's webcast on preventing AP fraud. As we discussed in the last blog entry and according to Nat:
"Every addition or change to the vendor master should be verified to approved documents [such as updated W9s, contract amendments, verified correspondence, etc]. That means approval and support before keying AS WELL AS verification to file changes AFTER processing. In order to avoid duplicate vendors on file, be particularly careful about how the vendor name is keyed with consistent naming and keying conventions."
Vendor addresses should be treated particularly carefully. Again, according to Nat:
"We need to guard against false addresses that can be used to embezzle funds. However, we are not only concerned with phony vendors but we want to confirm that the vendor appears to be a business person with legitimate qualifications to perform the work or provide the goods. Switchboard.com and Yellowpage.com have business and residential listings. Mapquest.com is great way to view a property. Many consultants/service providers work out of their home. Here is an opportunity to view their home. If they have an outhouse on the property you may think twice. If a goods producer lists an address on a vacant lot, a red flag goes up and you may want to check further."
Bottomline ... all new vendor addresses or changes should be carefully verified. With Google Maps or a similar tool, it's easy to check a vendor's office or location.
-Rakesh Shukla
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Posted by Steve Wilcox on Tue, Feb 24, 2009 @ 12:15 PM
For the past month, my blog entries have been focusing on AP Fraud. It's a fascinating subject and I just scratched the surface. If you want a true expert's take on AP fraud, Nat Goodman, President of Goodman and Associates, focuses on how to prevent procure-to-pay fraud through practical advice on how to tighten internal controls, prevent malfeasance, stop theft, detect red flags, and safeguard company assets for 5 vulnerable P2P processes:
- risk-mitigating tips for maintaining the master vendor file
- susceptible areas for p-card purchasing
- solid techniques for properly accounting for airline flights
- challenges and solutions for recording/accruing of expenses
- hard lessons learned for payment execution
Without stealing Nat's thunder, let me give you a preview of the first bullet point about master vendor files. How vulnerable is your vendor master file?
Be honest.
Nobody enjoys maintaining a clean master vendor file. It is tedious work that is often overlooked. And yet poor internal controls for vendor files can lead to massive AP frauds.
A very recent case in point is the $2.5M billing fraud in Utah where the bank account information for a legitimate vendor (an insurer) was changed (to a fraudulent bank account) ... without any verification. Fraudulent invoices were then submitted and paid to the fraudulent back account. The thieves stole $2.5M before getting caught.
According to Jon Casher, another AP industry expert:
"It's a very simple process to change the bank routing number and account number for payments being made via ACH. In the Utah case, the change was probably made without verifying that the new account number belonged to the insurance company. To prevent such problems from happening, all changes to the vendor master file should be reviewed and verified.
-Rakesh Shukla
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