Fraud Prevention Tip #27: Good Questions Before Approving Supplier Invoices

Here’s the wording for your anti-fraud article you should publish for all employees. Include your contact information so readers can reach out with questions and comments. Get ready for the question, “Why didn’t the company tell us this before!” They are going to love you for the following advice.

Good Questions Before Approving Invoices

Each day, managers review and approve thousands of invoices, contractor statements, time sheets, expense reimbursements, purchasing card details, and other documents that cause cash to be disbursed. All too often, that approval becomes a “rubber stamp” with little active thought about what the approval step really means. “Signatures without thought” make it easy for those who are trying to fool us. Approval of transactions that turn out to be fraudulent can be embarrassing at best and career limiting at worst!

Managers are encouraged to answer these basic questions before approving invoices and other payment documents. All address the general question of:

“How do I know?”

“Signatures without thought” make it easy for those who are trying to fool us. Approval of transactions that turn out to be fraudulent can be embarrassing at best and career limiting at worst!

1. How well do I know this vendor or contractor? Do I have first hand knowledge that they even exist! (Insert an example here)

2. Do I know that they actually provided the goods or services identified in the invoice or other billing statement? (Insert an example here)

3. Do I know that they are using the correct amounts for price (including unit prices used), sales tax, freight, and other variables that make up the amount invoiced? (Insert an example here)

4. On what basis do I know that the prices are reasonable in the first place? What standard have I used in determining that the price charged is fair? (Insert an example here)

5. How do I know that the quantities make sense? On what basis have we agreed to purchase the stated quantities? (Insert an example here)

6. How do I know that the invoice and other documents are mathematically correct? (Insert an example here)

7. Do I know that this invoice has not already been paid? (Insert an example here)

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”