1. Initial Preparation:

• Obtain a full extract of your accounts payable data for the review period.
• Secure access to relevant accounting software or ERP systems.
• Collect copies of vendor contracts, terms, and conditions for reference.

2. Duplicate Payment Analysis:

• Scan for duplicate invoice numbers for the same vendor.
• Check for invoices paid on both purchase order (PO) and non-PO basis.
• Identify payments with matching amounts to different vendors.
• Review payments with similar invoice numbers, varying by one or two digits.

3. Overpayment Analysis:

• Compare invoice amounts with contract terms to identify overpayments.
• Check for payments made for canceled goods or services.
• Validate if any credit notes or rebates from vendors were missed or not applied.
• Analyze tax payments to ensure correct tax rates were applied.

4. Vendor Master File Review:

• Look for duplicate vendor entries (e.g., slight variations in name or address).
• Scan for inactive vendors with balances.
• Validate vendor bank details, especially for foreign vendors.

5. Statement Reconciliation:

• Reconcile vendor statements with AP records to ensure all credits are accounted for.
• Communicate with vendors to clarify any discrepancies or obtain missing credit notes.

6. Unclaimed Property Due Diligence:

• Identify any uncashed checks or unclaimed credits.
• Follow statutory requirements for notifying vendors or beneficiaries of unclaimed funds.
• Document efforts made to reunite unclaimed property with rightful owners.

7. Review of Terms and Discounts:

• Ensure all early payment discounts are taken when applicable.
• Validate that agreed-upon terms and conditions (e.g., volume discounts, rebates) are being applied.

8. Miscellaneous Checks:

• Look for round-number payments that might indicate estimations or errors.
• Review payments without proper supporting documentation.
• Check for payments made outside the regular AP cycle.

9. Review and Update AP Controls:

• Evaluate current AP procedures and controls.
• Identify areas of weakness and recommend enhancements to prevent future errors.

10. Documentation:

• Document all findings, including overpayments, duplicates, and discrepancies.
• Communicate findings to relevant departments and vendors.
• Secure approvals for any recoveries or adjustments.

11. Recovery Actions:

• Initiate contact with vendors for repayment or apply credits to future invoices.
• Document all recovery actions, including dates, amounts, and vendor communication.

12. Review Closure:

• Prepare a final report summarizing findings, recoveries, and recommendations for process improvements.
• Present the report to senior management or the appropriate committee.
• Implement recommended changes to AP processes and controls.

13. Follow-Up:

• Schedule a follow-up review to ensure process changes have been implemented and are effective.
• Monitor AP processes regularly for any signs of recurring issues.