Continuous Audit in Recovery Audit Software
In the 1970s, many companies expanded or merged to form complex corporate structures. At the same time, many began to outsource more of their functions than usual, creating a need to process hundreds, sometimes thousands of invoices as well as the normal pay roll functions. To solve this problem, the tradition of regular accounts payable audit was born.
Nowadays, most companies of a certain size need outsourced specialist companies to create functional and efficient accounts payable audit and reduce – or, ideally, eliminate - the revenue loss that always comes with overpaid invoices, duplicate payments, misapplied tax, unclaimed rebates, incorrect currency conversions, VAT and discount adjustments, and all the other little things that can go wrong when running a large and complex company with a robust financial operating system. Because although a couple of incorrect payments to a contractor or supplier may not be much on their own, they have an insidious way of adding up sometimes to millions of dollars.
Traditionally, a recovery audit is carried out at regular intervals to correct any miscalculations, errors or even deliberate fraud attempts by contractors, suppliers or staff. These audits are applied after payments have been made, and often end up massively increasing a company’s bottom line. Usually a recovery audit, as well as identifying specific mistakes, will also spot problems in management or process which may be allowing these mistakes to occur. Then, employees are trained and systems changed in an attempt to reduce the mistakes made in compliance and correct payment.Â
Now, many of these accounts payable companies use recovery audit software to carry out a constant and efficient survey of effectiveness throughout the year. Modern recovery audit software comprises a set of tools which can be used by accounts payable teams to monitor compliance and weed out incorrect payments or duplicate payments. These analyse payment history through web-based on-demand systems which monitor transactions thoroughly.
With this kind of transaction monitoring, customers are discovering a large number of historical overpayments – which can be recovered, either by the accounts payable company or, if preferred, by the company itself. Patterns can also be revealed which may indicate a fault in processing systems, an inefficient or even fraudulent staff member, or a regularly dishonest contractor.
Drilling down into data electronically eliminates human error and provides clear and readable evidence of patterns of fault, error or simply systems that are outdated and can be changed to see an increase in bottom line profit. No wonder that so many managers are adopting this new recovery audit software as a key service for their companies!
