Audit of Accounts Payable Checklist

An audit of accounts payable is an essential process that ensures company records meet Generally Accepted Accounting Principles and can help detect potential fraud or errors such as duplicate payments, overpayments, or misrecorded liabilities.

Internal auditing of accounts payable becomes much simpler when businesses implement an accounts payable automation solution, helping streamline the entire auditing process while decreasing risks related to data breaches and compliance issues.

1. Review Purchase Orders

Purchase orders (POs) are generated based on anticipated business volumes, detailing which goods or services your company requires for purchase. They include buyer and seller contact information as well as details such as type and quantity purchased as well as price and payment terms.

Reviewing Purchase Orders requires matching invoices against POs to ensure your company only pays for what it receives and that requisitioners request items from suppliers with which it complies. This step helps to ensure you pay only what your invoices show and are receiving.

The accounts payable team utilizes various internal controls to mitigate errors, fraud, and compliance risks associated with their process. These controls include three-way matching, data entry control, segregation of duties, check number tracking and accounts payable automation that strengthens key controls such as real-time visibility into the process and audits so you can detect possible control issues quickly and take necessary measures quickly - learn more about best practices for accounts payable internal controls!

2. Review Invoices

An internal accounts payable audit allows your team to verify the accuracy of all invoices and payments recorded within your company, helping reduce fraud, improve data entry accuracy and ensure compliance with company policies and purchasing agreements.

Reviewing an invoice involves verifying its details, such as items, tax rates and totals. In addition, proper general ledger coding and accounting periods must be observed.

As well as double-checking that an invoice matches what was ordered, it's also essential to determine whether a vendor offers early payment discounts that might save your business money. Furthermore, check its due date so payments are made timely according to your preferred payment terms.

BigTime provides an invoice notification system so you can stay on top of invoices and their submission. To activate this feature, navigate to MY COMPANY...PENDING APPROVALS.

3. Review Payments

Auditor will also verify that all transactions have been disclosed by your business during an accounts payable audit, such as current liability calculations and cost of goods calculations, as well as request footnotes where information can't be discerned from simple recording.

Your auditor will provide a report documenting your business's payable audit procedures and any unmatched payments or potential fraud discovered during review process. Take this opportunity to strengthen internal AP controls.

To ensure the strongest AP automation systems possible are in place, consider choosing a third-party software provider with a SOC2 compliance certificate. This standardization standardizes data security practices so your internal financial reports remain safe and reliable. AP automation tools also now monitor AP processes real time while producing comprehensive reports for auditors to review; helping reduce errors, fraud or any other complications from occurring within accounting processes.

4. Review Checks

Auditing accounts payable can not only mitigate fraud, errors and compliance issues but can also save companies valuable time and money. With effective internal controls in place, accounts payable departments can quickly detect any discrepancies between receipts and invoices or a lack of segregation of duties that might exist within their processes and quickly rectify potential problems as quickly as possible.

An efficient internal audit process for accounting provides real-time monitoring capabilities, which enables auditors to detect possible areas of concern before they become more serious issues. This is essential for ensuring accuracy in financial reports while complying with regulations and standards.

Utilizing accounting software solutions like MineralTree's TotalAP can enhance the efficiency and effectiveness of your internal audit of accounts payable. This tool will alert you whenever sensitive information changes in your vendor database - which could indicate fraud or other issues - so that you can quickly contact vendors to verify correct details.