GRIR (goods receipt / invoice receipt): This clearing account is used to clear receipts against invoices. It can also be used to see:
- When an item is received and there is no invoice after xxxx days to call the supplier before past due and get a copy;
- If there is an invoice and no receipt in xxxx days, trigger an auto email to the requestor to receive items into system;
- When closing the books, receipts received and not invoiced could be accrued and then reversed next month.
Reconciliation of vendors: The process auditors use is to request a full statement of account from the supplier for a certain time frame and ensure that the AP vendor master file history has a record of all invoices, credits and cash on account for the same time frame.
Periodic AP activities include:
- Low-value check runs: Do not process checks under $10.00 in regular check runs, but only run these once a month
- Batch foreign payments monthly, to save money in purchasing foreign currency
- Annually request full statements from suppliers; check invoices/credits/cash on account (COA)—validate address, research and collect all credits/COA, eliminate reason(s) COA happened, for example, duplicate payments.
- Vendor master file audits:
- Look for duplicates: search by tax ID or use zip code (unique identifiers)
- Close/deactivate vendors that have done no business within a specified number of months (minimum of 13 months history, so as not to deactivate vendors of annual supplies)
- Validate that 1099/1042 status is properly identified
- Obtain missing tax ID's (best class: all vendors; minimum: all unincorporated vendors)
- Run an aged trial balance report and look for:
- Credit balances: on top (from an AP prospective)
- Old invoices aging and not paying top dollar down (below credit balances)