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Methods of Identifying Fraud and How To Prevent It

Methods of Identifying Fraud and How To Prevent It

One of the most significant challenges of Accounts Payable (AP) is encountering fraud. AP fraud could be damaging to the business. These incidents can happen in both external and internal environments of the organization.


AutoReconcile gives an overview of classic methods of identifying fraud and how to prevent it. Having a basic knowledge of AP fraud can help protect the business’ financial loss.


Identifying Suspicious Fraud Incidents
1. Increasing volume of records.
An increase in the volume of items compared with previous purchases could be questionable.


2. Double entry-payments are the red flag
Encountering double entry-payments may sound not related to fraud. But having it every time could be alarming. Mostly, AP Professionals investigate duplicate entries more that could also identify fraud later on.


3. Identifying missing information on the statements.
Vendor details such as name, invoice number, address, PO box and tax number are missing.


Preventing Fraud Incidents
1. Run Strong Internal Accounts Payable (AP) Controls.
Delegating right amount of duties for each person helps run the payment process smoothly. Moreover, employers need to rotate team members.


2. Apply Benford’s Law Method.
The formula can be utilised to understand financial data as well as identify suspicious records. If the accounts don’t look like it followed the formula, it may have been manipulated. Benford’s Law is a fast, efficient tool that is useful for auditing loads of data.


3. Open Communication.
Having an open communication between team members and suppliers promotes honesty. At the same time, it nurtures a happy environment that can prevent fraud.


4. Maximise the AP Automation Systems
Aside from reconciling statements faster, it also gives time to focus on exceptions and fraud. For example, AutoReconcile has special filters that identify exceptions after the process. AP professionals have more time to investigate the discrepancies and communicate with vendors for clarifications. AutoReconcile gives the value of time to enforce duplicate monitoring invoices and possibly, frauds.


AutoReconcile can assist you in identifying discrepancies and give more time to focus on it. Our team would love to present a demo for a limited time. Register  for FREE at http://www.autoreconcile.com.au/wp/book-a-free-trial/

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