Organizations often overlook the potential errors, discrepancies, and duplicate payments in their accounts payable processes during day-to-day operations. These small errors and overlooked risk of fraud can cause considerable damages, financial instability, and damage to the goodwill of the company.  That is why an Accounts Payable Recovery Audit is considered a best practice. The audit helps to detect overlooked opportunities for financial optimization and open credit recovery on accounts with your vendors.

Accounts Payable recovery companies conduct thorough and comprehensive A/P recovery audits, helping businesses uncover hidden value and recapture lost funds. In this blog post, we’ll tell you why an A/P audit is considered a best practice and how it can benefit your organization.

What is an Accounts Payable Recovery Audit?

An accounts payable recovery audit is an independent, systematic review of a company’s accounts payable records, invoices, payment transactions, and vendor contracts. It evaluates whether the organization is recording all the transactions accurately, and whether those transactions present a fair view of the company’s business. The primary objective of the auditor is to find and rectify mistakes like overpayments, duplicate payments, pricing errors, unclaimed credits, contractual discrepancies, etc.

Are AP Audits Mandatory?

A/P recovery Audits are mandatory in the USA and for most US-based companies. According to the Sarbanes-Oxley Act in 2002, most public companies are required to submit their records for external auditing, where the auditors check to verify whether company records adhere to GAAP principles. The AP audit helps to achieve the four important benchmarks:

• To provide appropriate disclosure of documents (e.g. year-end financial statements and bank statements).
• To ensure AP compliance with GAAP.
• To validate all transactions and records for accuracy and legitimacy.
• To check all AP data and reconcile every transaction for the year.

Do you know why A/P Recovery Audits are considered a best practice?
Most organizations have an internal audit department that periodically reviews A/P policies, procedures, and sample transactions.  Many companies hire an independent third party to have an AP recovery audit conducted. Here are few reasons why A/P recovery audits are important and why the organizations consider it a worthwhile practice.

To Avoid Financial Leakage:
Organizations cannot afford financial leakage, so the accuracy and integrity of the financial records should not be in question. An A/P recovery audit helps companies to maintain trust with stakeholders and meet financial compliance standards.
A/P recovery audits serve as a safety measure against financial leakage, and an independent A/P audit confirms that your accounts and financial statements give a true and fair view of the business.

To Save Cost:
Accounts Payable recovery audits help to recoup a significant amount of money because the businesses can identify erroneous payments and charges through the audit process. The businesses can utilize the recoveries by investing them into the operations, thereby increasing both productivity and profit. Moreover, the A/P audit reveals any fraudulent activity like fictitious vendors, unauthorized payments, or billing schemes. When the organizations detect and address the fraud early, they can avoid financial losses and potential legal liabilities which can be imposed due to fraudulent transactions.

Improves Accounts Payable Processes:

The A/P recovery audit helps to determine how organizations can improve their Accounts Payable processes. The audit not only detects errors, but also highlights areas where improvement is required. The auditt helps in streamlining the current processes, and also suggests better controls for the organization going forward. By adopting these controls, the organization can improve its efficiency, reduce risk, prevent errors, and minimize the potential for fraud and forgery.

Vendor Relationship Management:

A/P Recovery Audits play a major role in building good relations with the vendors and suppliers. When organizations procatively identify and fixing mistakes in how they pay their vendors, it helps them build stronger relationships. It shows their vendors that they are honest and fair in their dealing. It builds trust between the organization and their vendors. 

Compliance Assurance:

A/P audits help to ensure compliance with contractual agreements, regulatory requirements, and industry standards. The audits are considered as a best practice from both an accounts payable and an internal audit perspective They help to mitigate risk, minimize chances of fraud, and maintain compliance with standard operating procedures.

Is Accounts Payable hard to audit?
Yes. Accounts Payable audits can be a challenging task for numerous reasons, including very high volumes of transactions and vendor relationships. Sorting through large volumes of data is time-consuming and requires careful attention to detail.
Moreover, the invoices and expenses involved in the process are complex. Auditors may also need to evaluate the internal controls of the company and must know how to analyze the A/P data to predict anomalies and potential risks.
Auditors with knowledge of A/P processes, internal controls, and industry best practices are best suitedto understand these complexities. Auditors are required to plan the process thoroughly and document each and every instance carefully. They also need to collaborate with the stakeholders in order to provide valuable insights to the organization about their processes and controls.

How AP Impact Can Help You in Account Payable Recovery Audit:

We are available to make this daunting task easy for you.

As experts in A/P recovery audits, we offer audit services that are tailored to your organization’s needs. We have a team of professional auditors who utilize their extensive knowledge and skills to identify potential risks, uncover fraudulent activities, and help to recover your lost funds.

If you want to optimize your processes (no matter how big or small you are), our team ensures a smooth and independent audit process. We believe that organizations cannot afford to overlook opportunities for financial recovery and optimization, so we work hard to meet your expectations and deliver tangible results. Here’s the best part: We only charge a percentage of what we recover. If you would like to consult with a professional audit team that is both reliable and affordable, we would love to have a conversation about the opportunity.