We are currently trying to implement a new e-payable system in partnership with our bank BOA...

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Q. (cont.) In the past we used to match our backup directly to the check stubs, but with this new implementation and the addition of ACH payments, we are having problems determining new auditing parameters to make sure all payments are accurate and no vendor is double paid. We currently have a volume of about 450 checks a week, sometimes with multiple pages of paystub involved. Does anyone have any pointers in how to perform this task accurately and quickly when the check stubs are out of the equation? Currently, we enter all invoices manually and we do not have access to electronic invoicing. 

A. We consulted with expert advisor Judy Bicking, formerly head of Johnson & Johnson’s shared services. Her first recommendation is to have your software do a duplicate check every time an invoice is entered into the system against:

Vendor number, invoice number, Invoice date, invoice amount to be paid (“VIDA” for short).

- If you get a four-way match, it is a duplicate
- If you get a three-way match, it most likely is a duplicate
- If you get a two-way match, it is most likely is not a duplicate (take the risk that it is not a duplicate)

IF every time that invoice is touched (changed in any way) it goes back through the duplicate check, THEN: when you send the check file, the data has already been audited for duplicates.

HOWEVER: To ensure there are not any other errors, you can create a report called Pay File. This report should be audited before you send the actual pay file to BOA. This report is run top dollar down, and the AP check auditor (staff member) should look up and compare the pay information to the invoice data in the system.  If all data matches, the pay file is released to BOA. Note that many companies do not audit every item, but rather every payment over a certain dollar amount (larger payments), plus check just a percentage of the rest of the invoices.
     
Example:
 -  All checks over $3,000.00 are compared to the system invoice data;
 -  For the rest of the payments the auditor looks at every fifth check and compares to the system invoice data.

Judy also recommends having a recovery audit of your AP file done once a year, or at a minimum, every other year, until all pay type errors have been determined and resolved.

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