NAFA Audits Provide Purchasing Solutions to Tighten Your Procurement Processes
Protect your company by eliminating preventable losses
There’s an old adage that you have to spend money to make money. But you have to be careful how you spend, or you could easily expose your company to waste, abuse and even fraud. Yet, it’s commonplace for companies to have lax controls over their purchasing processes. Leadership is able to say if the organization is overpaying for goods or services, or even getting everything they paid for. Then, if controls are loose enough, supplies and merchandise start walking out the back door. Taken altogether, these lapses can totally derail an otherwise profitable company. If you’re concerned about weaknesses in your procurement processes, North American Forensic Accounting PC can help. Our internal audit experts and forensic accountants perform audits of processes and controls to detect deficiencies, implement best practices and enhance organizational efficiency. In short, we help you find your lost profits and keep them from going missing again.
Waste is an expense no one can afford
The goal of business is profit. Revenue matters, but there’s a reason profit occupies the bottom line. And you can’t get to a healthy bottom line without controlling costs. For this reason, you have to scrutinize how you spend money, and your procurement processes are key. Here is where employees in your organization decide to spend, make transactions, and verify transactions. If your controls are weak in this area, you’re inviting waste, fraud and abuse.But NAFA can help you review and improve every facet of your procurement process, including:
- Purchasing — We update your processes to industry best practices for buying, receiving, and accounting for your purchases.
- Competitive bidding — We can revamp your bidding process to yield the best bargain from prospective vendors.
- P-Card usage — Lax tracking of employees’ P-Card usage enables abuse. We help you implement proper controls.
- Expense reimbursement — If you are not strict about reimbursing employees only for valid, business-related expenses that are adequately supported, you’re incurring unnecessary costs and violating IRS regulations.
- Third-party risk assessments — If you’re doing business with unvetted vendors, you could be saddled with losses from their substandard performance.
Sometimes it takes the fresh eyes of neutral third party to uncover lapses in process controls. Our team audits your processes to pinpoint problems and provide a thorough assessment. We can also train up your staff in best practices to enhance their efficiency.
Procurement process review and assessment
Our procurement review can save your company significant money by identifying wasteful practices, as well as outright fraud in your purchasing department. We perform a close examination of your processes and controls. This includes comparing each transaction’s purchase order, invoice, and receiving report to spot discrepancies. Then we analyze the data to detect anomalies that indicate a potential problem. Prominent indicators include:
- Correlations between vendor addresses to employee addresses
- Duplicate invoices
- Sequentially numbered invoices from the same party
The purchasing process is where organizations are most vulnerable, so this is where any attack on waste, abuse and fraud has to start.
Expense reimbursement plan administration
Your company, like many others, might reimburse employees for an initial outlay of expenses. But if you’re doing this on the “honor system,” you’re sending an open invitation for employees to pad expenses. If you’re not vigilant about reviewing submitted expenses, you’re creating a culture that tolerates cheating. When a culture’s gone bad, it’s hard to turn around, especially if you’re relying on new managers to rein in senior employees. NAFA can help your company implement an effective expense reimbursement plan starting with an appropriate and clear policy and a system for enforcement. (Not coincidentally, the IRS requires such steps if employees are deducting reimbursed expenses.) A prudent step is to outsource the review of expenditures to a neutral third-party. It’s important to emphasize that companies that enable the padding of expenses create an incentive for employees to cheat the company in other ways. Tighten your controls here and you send a sharp signal, which acts as a disincentive for other types of fraud. You also add cash to your bottom line and remain in compliance with IRS regulations.
P-card administration and monitoring
If your company provides credit cards to employees to cover business related expenses, you must have a system to review purchases. Without tight controls, employees can easily use purchasing cards for personal expenses, intentionally or accidentally.
Third-party risk assessments
In addition to your bottom line, you want to protect your company’s reputation. When you contract with a vendor who does not perform, that breach could prevent you from servicing your customers. Before you commit to an untested vendor, NAFA can perform a risk assessment to ascertain the vendor’s capacity to fulfill your contract. If you have already contracted with a questionable vendor, we can assess the risk, so you can take steps to protect your interests.
Eliminating conflicts of interest in competitive bidding
When vendors are bidding on a contract, you want to secure the best possible deal for the company. But when the decision-maker has a conflict of interest, you could easily get trapped in a bad contract. NAFA can help your company design and implement a sound competitive bidding process with appropriate controls to ensure an ethical process that yields positive results.
Contact North American Forensic Accounting PC to improve your procurement processes
North American Forensic Accounting PC helps business eliminate preventable losses in their procurement processes. To learn more, call us at 347-286-4860 or contact one of our offices online to schedule an appointment. Headquartered in Harrisburg, PA, NAFA serves clients throughout the United States, including in Philadelphia, Pittsburgh, New York City, Atlanta, Charlotte, Miami, and the Tampa Bay Area.