How AP Automation Helps Mitigate Fraud and Compliance Risks

December 5, 2018

By Mark Brousseau, Analyst and Researcher in Business Process Automation, Brousseau & Associates

If it feels like it is getting
harder to manage your
finance organization’s fraud
and compliance risks, you
are not imagining things.

 

 

 

The finance department is a target-rich environment for crooks:

  • Collusion
  • Vendor schemes
  • Inventory theft and fraud
  • Computer-based payments fraud
  • Conflict of interest
  • Fraudulent financial reporting

All told, 75 percent of global senior executives surveyed by Kroll say their organization has experienced some type of fraud, whether it’s insider fraud or supplier fraud. Each year, corporate America loses the equivalent of 5 percent of its total revenues due to fraud, studies show.

Making matters worse, businesses must contend with an ever-increasing regulatory burden and the risk of financial penalties, loss of business, reputational damage, and more. For starters, there are dozens of lists of parties that either a buyer cannot do business with, or that have specific restrictions on how a buyer can do business with them.

Having a state-of-the-art ERP application isn’t enough to manage these risks. Businesses must rethink the accounts payable processes that feed their ERP.

Regardless of your ERP application, manual and semi-automated accounts payable processes leave finance organizations extremely vulnerable to fraud and compliance issues in several ways:

  • No tracking of document history
  • No way to ensure that employees adhere to approval policies and separation of duties
  • No chain of custody assurances
  • Audit information that is not readily accessible
  • Poor PCI compliance controls
  • No way to prevent documents from being discarded or destroyed ahead of deadlines

Importantly, organizations that rely on manual and semi-automated accounts payable processes don’t have the real-time visibility into their financial data to tightly control their risks:

  1. Key information is not captured
  2. Data is poorly organized
  3. Information is not timely
  4. Systems are badly integrated
  5. Systems are badly integrated

That’s why 24 percent of all fraud cases are the result of billing schemes that could be prevented or detected by sound vendor master database controls and other reporting and visibility measures, per the Association of Certified Fraud Examiners. And that’s why audits induce feelings of nausea.

Finance executives have had enough. Eighty percent of finance executives tell Accenture that they are “concerned” or “very concerned” about their organization’s compliance and security risks.

For their part, 9 percent of accounts payable leaders identify security and compliance as their top improvement priority, per the Institute of Finance and Management (IOFM).

This is where accounts payable automation comes in.

Combining an automated accounts payable solution with a state-of-the-art ERP application enables organizations to mitigate fraud and compliance risks. Here are three ways how:

  1. Intelligent data capture: Automated accounts payable solutions capture information from invoices based on pre-configured business rules and validate the information against data that resides in your ERP.
  2. Automated workflow: Automated accounts payable solutions electronically route invoices based on pre-defined business rules, ensuring chain of custody and separation of duties and eliminating the possibility that invoices will fall into the wrong hands. What’s more, automated solutions track all activities within the system, such as who approved an invoice. And standardized processes ensure transparency and compliance.
  3. ERP integration: Automated accounts payable solutions seamlessly upload data and images on approved invoices to the organization’s ERP, providing 360-visibility into a transaction and the supplier. Invoices can be accessed directly from the ERP. And images and data are securely archived and maintained per your guidelines and cannot be discarded prematurely.

Fifty-five percent of finance organizations are investing in digital solutions to mitigate fraud and compliance risks, Accenture reports. Accounts payable automation should be part of this plan.

Find out more – watch a recorded webinar “The Expert Guide to Mitigating Fraud and Compliance Risk in Accounts Payable” (http://reach.ciis.canon.com/RecordedWebinar) To learn how CIIS can help your organization mitigate its risks, contact us at info@ciis.canon.com.