Payables Test Set for ACL

Rating:
Summary: Enhance you Exception Reporting
Review: I have worked as an operating CFO and division controller for large divisions of several Fortune 100 companies for over 15 years. Today my focus is on recovery auditing, mainly in the accounts payable area, as it is the most fruitful area for savings in an organization.

In my years of experience I have found that increased use of regular exception reporting on the integrity of transactions offers the best assurance that the reporting is accurate and that no "surprises" are lurking in the records. ACL software has become an invaluable tool to me for this use. I have monthly and quarterly exception reporting routines established. The reports provide me with areas of potential concern for further drill down analysis. The great thing about this routine is that it helps me to: (1) spot erroneous transactions that were merely keyed incorrectly; (2) enhance the profitability of our business; and (3) highlight areas of potential fraud for my review.

ACL Software offers numerous standardized tests that can be used with some training and development on your part. I have spent some time developing my own routines. But I don't have time to develop all the routines I want to use. It is just not the best use of my time. My company has purchased several "bolt-on" applications to work with ACL. These applications allow for quick start-up and they bring the expertise of the developer immediately to your tool box. Essentially, I have tools similar to those used by either our internal or external auditors. But I don't have to go through the extra efforts to compile the reports on an annual basis. I can see the results monthly and head off any problems that may be developing.

One such inexpensive bolt-on that I use consistently is the Payables Test Set for ACL by Richard B. Lanza. The bolt-on to ACL is only $200 and for that I get:
•All of the pre-written scripts (a.k.a. batches) in ACL;
•A menu system in ACL to easily select the script I desire; and
•A book to walk me through an entire audit of accounts payable with descriptions of each script. The script descriptions not only tell me what data to get and how the script will run but also why I should use it in an audit and what to do with the results.

The routines and exception reports provided in the test set allow me to easily check numerous areas. Below are my top reports (although the Payables Test Set provides over 30):

1)Test that we are maximizing vendor discounts. The reports highlight vendors that may be getting favorable treatment by our accounts payable staff.
2)Check for potential duplicate payments to vendors.
3)Test to see if we can maximize volume purchase by viewing vendor activity across department and location boundaries.
4)Confirm vendor invoiced terms versus our negotiated/P.O. terms.
5)Assure proper authorization of payments.
6)Monitor input activity by AP operator.
7)Summarize debit memos to review for adjustments to the sub-ledger and identify potential unknown liabilities if the debit memo is no longer valid.
8)Identify any payments made to vendors that do not currently exist, or never existed, in the vendor master-file. I know, you think this can't happen. Well, it can.
9)Check payroll address information against vendor address information for any similar addresses. This routine is exceptional. It does not just look for exact matches. It looks for similarities. If you have a fraudster in your organization, they may try to send vendor payments to a name or address similar to their own. This routine will flag it for your review.

In summary, I strongly recommend the use of automated analytic review of your company's transactions. The power of ACL combined with the Payables Test Set is a valuable component in this mix. In relation to reports sold by software vendors costing tens to hundreds of thousands of dollars, the Payables Test Set provides an inexpensive and "out of the box" solution, even for the less experienced ACL user. While such bolt-on reports are never a substitute for the auditor's creative mind, they do assist in jump-starting an audit and ensuring the basics are covered right out of the gate... all for under the cost of a good departmental lunch!