What are the internal controls related to accounts payable?

Question

What are the internal controls related to accounts payable?

Answer 1

First, there should be a purchase order system.  The purchasing officer should not be approving person nor he/she should be the disbursement officer.  Therefore, there should be proper segregation of duties.

Paid invoices should be stamped paid to avoid replication in payment.  Before a bill be paid, supporting documentation should be complete like the materials receiving report, invoice, etc...

There are plenty of controls for accounts payable, you can search online for the rest.

Answer 2

¨      Duplicate copies of invoices are clearly marked, immediately, upon receipt to avoid duplicate payment.

¨      Invoices are reviewed for mathematical accuracy.

¨      Vendor credit memos are resolved promptly by cash refund or taken against subsequent purchases.

¨      Returned purchases are controlled in a manner which ensures that the refund or credit will be received.

¨      The encumbrance record is periodically reconciled to open purchase orders and commitments.

¨      Adequate records are maintained for unmatched purchase orders, receiving documents, and unpaid vendors’ invoices.  These records are periodically reviewed and investigated.

¨      Monthly statements from vendors are reconciled to open vouchers.

¨      Procedures are in effect to ensure proper expenditure cut-off.

¨      Past due balances are properly reviewed and followed up on.

¨      Original invoices are necessary to issue payment.

¨      All partial deliveries are followed up on.

¨      Procedures exist for ensuring the accurate account distribution of all entries resulting from invoice processing.

¨      Procedures exist for submission and approval of reimbursement to employees for travel or other expenses.

¨      Cash discounts are taken, and if applicable, exemptions from sales, federal excise and other taxes are claimed.

¨      Differences in invoice and purchase order prices, terms, shipping arrangements, or quantities are referred to purchasing for review and approval.