Vendor master controls audit checks

Inactive vendors are flagged or purged on an annual basis or other prescribed frequency. Invoices are processed according to invoice payment terms.

ACH accounts should have debit blocking capabilities to ensure that no authorized debits can be placed.

How to Detect Duplicate Vendors While Auditing the Vendor Master File

Only one person should be allowed to create a new vendor. Changes to vendor master files are accurate and reported for audit purposes. A company should establish a Vendor Management Policy that should cover approval of vendors, approval authority matrix, contract approval review controls and any other policy controls over procurement in general.

Transactions are accurately reflected in the general ledger; AP reconciliations for aging and clearing accounts are timely performed and reviewed. Specific limits of signed authority must be established for bank accounts. Its a simple test, download and pivot and vlookup to match.

One major company I know of inactivates all vendors at the end of the year and reactivates them only as payments are made, each is reviewed for validity. Banking and disbursement information must be safeguarded from loss or destruction.

A vendor profile form is completed when required i. Sometimes they are the same due to employee fraud. Check requests should be routed to the appropriate personnel for review prior to payment release.

Discounts are taken if appropriately approved.

Three Essential Steps in Auditing the Vendor Master File

Vendor discounts should be taken according to company policy. Approved purchase orders, receiving transactions, and invoices must support requests for payment. Accounts payable process controls: This practice slowed rogue spend and also allowed us to capture economies of purchasing power. Controls Vendor master controls audit checks include but are not limited to those listed below: Vendors should be evaluated for related party relationships and marriages between your firm and theirs.

As previously stated, delegation of authority and segregation of duties are two corporate policy related or foundational controls required for the accounts payable profession.

Addresses of vendors are validated as accurate and reported for audit purposes. The vendor list is easy to review. Because the accounts payable function is responsible for the proper disbursement of funds to the correct vendor, the accounts payable professional should ensure that the vendor has been validated before setup on the vendor master.

Segregation-of-duties controls are exercised when granting system access to invoice processing functionality. Expenses must be properly and accurately recorded in the accounting records during the period in which the liability was incurred. Check requests must be used for the proper purpose and are limited in value.

Vendors are paid once and only once. Standard vendor naming conventions are applied. COSO should address most of your concerns. We did not allow anyone to be paid, who was not in the vendor master, without special clearance. Payments to contract labor vendors do not exceed the authorized amount.

A W-9 form is executed prior to setup on the vendor master when required. Proper accounting should be ensured for void or canceled checks. The following controls are specifically related to the accounts payable process and should be evaluated and implemented as appropriate for the organization 3.

For audit purposes, disbursement activities should be traceable to the general ledger and bank statement. If you are looking for employee fraud you might try comparing payroll direct deposit accounts to the vendor ACH accounts.Separate the duties of check stock custody, check preparation, check signing, bank reconciliation, and accounts payable processing and vendor master file maintenance.

Use physical or software controls to prevent unauthorized access to the check. The objective of the audit was to verify that adequate controls exist and are operating effectively over the setup and maintenance of vendors in the Accounts Payable Vendor Master File.

Background The Auditor and Controller’s Accounts Payable Division (A/P) is. Office of the City Auditor Report to the City Council City of San Jose AN AUDIT OF THE CITY OF SAN JOSE’S MASTER VENDOR FILE The City Needs To Improve Its Controls. Supplier Audit Program Improve Supplier Controls with an Effective Supplier Audit Program.

Today, more than ever before, frequent and more intensive supplier audits are critical to ensuring supply chain integrity.


A vendor master file may contain a data field to record month-to-date payments. A total of all the vendors' month-to-date payments in the master file should be reconciled with and equal the total for all the checks written during the month to those vendors.

A control totals. Three Essential Steps in Auditing the Vendor Master File Contract implementation is an integral part of the strategic sourcing process.

An important aspect of contract implementation is conducting periodic audits, to make sure all data is accurate and all components of the project are in sync.

Vendor master controls audit checks
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