WHAT IS VITALICS
Vitalics is a small business internal control program that provides all the tools to easily set up and implement your company’s controls. Vitalics contains over 140 already created yet customizable internal control forms, checklists and templates in a desktop application. Vitalics forms are also available separately. Whether you are a business owner, office manager, bookkeeper or accountant, Vitalics will provide you the reassurance that your work or your company assets are protected.
The average duration of a billing scheme lasted 24 months before it was detected with an average fraud loss of $100,000. The primary cause was lack of accounts payable control procedures. The following industries that have a higher risk of for these types of schemes are construction industries, religious, charitable or social services as well as health care and transportation and warehouses.
COMMON PAYABLES FRAUD SCHEMES
Billing Scheme Types
Invoice kickbacks are fraud schemes perpetrated by an employee and the employee’s vendor or customer. It usually involves the employee buying goods or services at an overstated price.
Bid rigging scheme is a collusive fraud where an employee helps a vendor illegally obtain a contract that was supposed to involve competitive bidding.
A Shell Company is a fabricated entity with the purpose to commit fraud. Shell companies are unfortunately very easy to set up and in order for the perpetrator to get away with their shell scheme, they generally have complete control over the accounting functions and are able to approve vendor invoices for payments.
A pay and return scheme is another type of billing scheme where the perpetrator purposely overpays, double pays or pays the wrong vendor then requests a refund and intercepts the check.
VENDOR CONTROL PROCEDURES
Require a Vendor Application
Do you know who your vendors are? Requiring a completed application on all of your vendors can reduce the risks of a billing scheme.
Require invoices, P.O’s and packing slips attached to checks
Never sign vendor checks without all of the proper back-up documentation to prove what the payments are for.
Use a Check Run Approval Form
Make sure your accounts payable check batches are attached to an approval form. This provides accountability on who processed the checks and who signs them giving authorization and final approval.
Secure your checks!
Checks are easily duplicated. Storing your checks in a secure cabinet with protect you from unauthorized use or forgery.