Fall 2004

Welcome to the fall issue of Profit Search eNews. We are very pleased to bring you interesting commentary and news on A/P matters from Profit Search Inc., an accounts payable audit firm in Massachusetts, online at www.profitsearchinc.com.

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In this issue, we feature the following:

• Industry News - Check 21

• NE IAPP Meeting Content - Automated invoice/T&E processing

• Sarbanes-Oxley - Internal controls

• Unclaimed Property - opportunities for personal benefit

Industry News

Check Clearing for the 21st Century Act ("Check 21")

The check clearing landscape is changing.  Banks want to reduce the number of paper checks in the system and they want to clear checks faster to reduce float.  You may have noticed in the past year a number of your personal checks being cleared as electronic items rather than paper checks.  Me too.  And it causes me a headache when reconciling my bank account.

As of October 28 2004, the effective date of Check 21, banks don't have to return your original checks but can provide a "substitute check" (image copy) instead.  See the press release from the Federal Reserve at: www.federalreserve.gov/boarddocs/press/other/2004/20041028/Default.htm

For an excellent discussion of questions and answers about Check 21 by Consumer's Union, go to: www.consumersunion.org/finance/ckclear1002.htm

Don't confuse Check 21 with electronic check conversion.  This occurs when an electronic payment is created from the information on your check.  You may have experienced this when paying by check in a store, but any vendor can convert a check.  For instance, both my mortgage company and credit card company now process check payments electronically.  I don't remember authorizing them to do this, but I probably missed a notice they sent.  For more information about electronic check conversion go to: www.federalreserve.gov/pubs/checkconv/default.htm#differ

P.S. Insight: Expect the checks you write to clear faster.  Make sure you have enough money in the bank to cover the checks you write!

P.S. Insight:  Check 21 has negative implications for fraud control.  It will be harder to prove fraud, not having an original check available to review.  If you're interested in the fraud aspects of Check 21, go here for a white paper from Unisys.

IAPP

Recent NE IAPP Chapter Meetings

If you missed the last two (June and October) meetings in Sturbridge, MA, too bad!  The next meeting will be in February in the Boston area.  Please make an attempt to attend these meetings where you can share information with your peers.  Here are two excerpts from the prior sessions:

• Mike Anzalone of Concur Technologies, (http://www.concur.com/) a global leader in expense management, presented their web-based automated solution to Expense Management (T&E) Processing.  There are huge potential savings from:

            - less time handling papers (fewer manual entries)

            - vendor management gains (consolidating vendors, better pricing)

            - less abuse of company policies (built-in compliance; prohibit certain behaviors)

            - spend information and analysis

            - reduced need to audit paperwork

            - better VAT reclaim

This presentation was followed an open discussion of T&E policies and processing at member companies and what challenges members are facing in this area.

• Craig Clark and Ozlem Yilmaz of BasWare, Inc. (www.basware.com) presented their company's integrated Invoice Automation Software.  Invoice automation provides for paperless approvals, improved document tracking, information and statistical reporting and better cash management.  It will reduce processing errors, increase revenues (discounts) and enable better access to invoices.

Craig walked us through several sample entries using the program interface. 

P.S. Insight: These are two of the many vendors with many software programs to manage your invoice processing and automation needs.  Make sure you evaluate your needs and what the vendors have to offer before you make a commitment!

Sarbanes-Oxley

Internal controls in the accounts payable department

The Sarbanes-Oxley Act (SarbOx) requires the CEO and CFO of a public company to certify that its internal accounting procedures are designed to prevent financial misstatements or misuse of company assets (cash).  Although SarbOx applies only to public companies, the internal control requirements are worthwhile for any organization that wants to operate under best practices.

Many of you have been involved with (or the target of!) review projects to outline and evaluate the internal systems in the accounts payable area.  It may be painful but it is a valuable opportunity to understand and update routines which have broken down over time and to ensure proper policies in your areas.  Proper controls will safeguard assets, ensure efficiencies and prevent losses. 

Here are some key aspects of internal controls in the accounts payable area:

• Policies and Procedures.  Establish adequate policies and procedures for a/p processing routines.  Review the different policies from time to time in your staff meetings.

• Training.  Ensure proper training of staff. Train new staff until you are confident they know the proper procedures.  Hold occasional meetings to review important areas and to talk about problems and issues.

• Approval Authorities.
  Require approvals to set up a vendor
  Organize access rights to accounts payable records (review individual access rights periodically)
  Establish appropriate authority levels to approve invoices

• Segregation of duties.  No one person should have control over assets and access to accounting records (no one should control the entire financial transaction)

• Safeguard assets.
  Restrict access to blank checks
  Use prenumbered and fraud-resistant check stock
  Review vouchers and match and review before releasing checks
  Ensure proper check signature procedures
  Use positive pay

Unclaimed Property

Organizations are required to make annual payments for abandoned property state governments.  Annual payments are generally required by November 1^st.  Did you make your annual payment this month?  There are stiff fines and interest penalties, in addition to the property amounts, for failure to comply.

Dont forget that you, personally, may be a beneficiary.  In particular, unclaimed money from recent demutualization of insurance companies (in particular MetLife Inc. and John Hancock Financial Services Inc.) is now available at state treasurers offices.  Here are the state links for you to check for your own unclaimed property:

• Connecticut - http://www.nameitandclaimit.org/

• Maine, New Hampshire - www.missingmoney.com

• Massachusetts - abpweb.tre.state.ma.us/abp/frmNewSrch.aspx

• Rhode Island - www.treasury.ri.gov/unclaimed.htm

P.S. Insight:  Don't forget to check for unclaimed property for your company or organization!

 

We hope you enjoyed this issue of Profit Search eNews and found something here that you can put to good use in your job. We know that sometimes it is difficult to stay current on A/P issues, and that is why we bring you Profit Search eNews.

 

Doug Costello, CA MBA CAPP
President
Profit Search Inc.

P.S. Got questions, comments, or ideas for us? Email us at: info2@profitsearchinc.com or call (508) 875-1815 -- Thanks!