The following are a few internal control ideas related to accounts payable administration:
§ Have only a physician sign checks.
§ Pay by invoices, not statement, with a knowledgeable person okaying payment (a “received” signature is not the same as a “okay to pay”).
§ Review payroll reports, including payroll check list. Look for correct pay, bonus, deductions, inflated overtime, and fathom employees.
§ Review bank statement each month.
§ Petty cash: require original receipts attached to a monthly log. Have the requestor sign petty cash log (showing amount and brief description). Do not allow “borrowing” from petty cash.
§ Be suspicious if accounts payable person doesn’t take vacation or is very possessive/defensive about you looking at his/her records/files/check register.
§ Consider having a separate person reconciling the bank statements.
§ Have the bank mail the bank statement to a different address (so the person cannot access it).
§ Make sure that when checks are presented for signature, that the supporting documentation (i.e. the invoice) is attached to the check so the signer can verify the validity of the expense.
§ The accounts payable person should not be the one ordering supplies. Embezzler’s will frequently order excess amounts (which your company pays for), then they return it and have the supplier either write a check to them personally, or credit their personal credit card.