Accounts payable is a vital part of your business’s fiscal ecosystem. Why? Because essentially, it’s paying bills – money leaving your account to take care of the services or products you’ve bought from relevant suppliers. It stands to reason then, that conducting regular accounts payable auditing processes is a necessary part of an accounts department’s operational structure.
Let’s talk here around the importance of accounts payable auditing, and why it’s so crucial to keep an eagle eye on what you’re paying and who you’re paying – basically, where your money is going.
What is accounts payable auditing?
Accounts payable auditing is, fundamentally, a detailed review of the financial information recorded in a business’s accounts payable records. So, everything paid to suppliers, service providers, and landlords – it’s a review of the money paid for monthly bills, to be exact.
Why is it important to conduct sound audits on the accounts payable ledgers?
- To search for unrecorded liabilities
- To mitigate fraudulent payments
- To authenticate payments against bills and invoices
The purpose of accounts payable auditing
So, why audit – and particularly for the accounts payable process? A regular accounts payable auditing system lets you find the following:
- Duplicate payments
- Overcharges
- Unclaimed credits
- Overlooked discounts
- Fraudulent vendor contracts
- Uncashed cheques
- Overlooked payments
- Overdue payments
How to audit your accounts payable
Here’s a brief overview of the accounts payable auditing life cycle:
1) Planning
Upon notification of the accounts payable auditing requirement, the business will outline and plan the parameters of the process, with an established, third-party auditing company.
2) Examination
The auditing team examines the accounts payable records of the business and generates a detailed analysis in report form. This can take a few weeks, depending on the size of the business.
3) Reporting
Based on the findings in the analysis, an accounts payable auditing report is generated, summarising and detailing relevant points in the process, with feedback and guidelines. It’s here that any immediate concerns are highlighted.
4) Review
Once the report is generated and submitted, reviews and follow-ups are conducted to ensure all issues and concerns have been addressed, and that the results are then satisfactory.
The benefits of accounts payable audit automation
Accounts payable auditing can be an involved tradition, but it’s no less vital to the sound tracking of a business’s payment records. To solve the problem of the audit’s time-consuming, stressful and disruptive inevitability though, the process can be fully automated, if a competent AP automation software solution is implemented. Not only will automating the process save time and money, but it’ll simplify the process by removing the need for human involvement, freeing up your financial professionals so that they can carry on with more creative and strategic tasks.
DOKKA’s smart AI in automated accounting provides that simplicity, and what’s more, with it plugged into your existing enterprise resource planner (ERP), you get these benefits for your business:
- Eliminates costly manual data entry and improves accuracy
- Ensures compliance in every stage of the audit
- Accelerates processes within accounts payable auditing
- Gives your finance team visibility of bills and invoices in real-time
- Integrating with your ERP means better data
