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  • Writer's pictureJerry Ipsen, CFE, MBA

Targeted Vendor Examination Checklist

Updated: Sep 29, 2020

Following an in-house examination of accounts payable, a business owner may have a specific vendor in their sights. Such a targeted vendor examination can confirm the cause or creation of the overcharges, billing errors, and conflicts of interest. Vendor examinations often include a summary of the facts and a number of recommendations for improvements to the overall vendor management program. Keep in mind, strong and enforced internal controls help in the reduction of the company's risk of exposure to similar circumstances from occurring in the future.

An onsite visit to a vendor's office will likely see the Fraud Examiner performing the following activities:

  • A comparison of selected detailed invoices to (purchase order) agreements and approved rate sheets to confirm charges are both legitimate and accurate.

  • A review of the vendor's accounts receivables entries for any "no charge" or deeply discounted services.

  • A review of vendor expense records for potential ethical violations such as inappropriate gifts or trips.

  • Verification that vendor employee-related charges (including per diem) were allowable, accurate, and legitimate.

  • Examining for conflicts of interest include an analysis of the vendor's cash disbursement journal for payments to the company or the company's employees.

  • A review of the vendor's check register and/or bank statements to determine if any payments were made directly to company employees.

  • Confirmation that materials and equipment charges on billed invoices are legitimate.

  • Changes to rate or the scope or timing of work were properly communicated by the vendor and approved.

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