The AGA Fraud Prevention ToolKit
Billing Schemes
AGA's Fraud Prevention ToolKit

Billing Schemes

Example Red Flags Tools/Best Practices

General Guidance

Invoices cannot be traced to shipments.
Multiple payments to single vendor on the same date.
Pattern of purchases just below review level.
Unusually quick turnaround of invoices.
Payment to multiple vendors for same product.
Extreme inventory shortage.
Expenses increase dramatically.
Unexplained rise in cost of goods sold.
Unexplained decrease in gross/net profits.
Excessive materials orders.
Goods not purchased at optimal point.
High level approval of a low level transaction.
Controls:
Invoices, purchase orders and receiving reports must be matched before payment issued.
Purchasing department should be independent of: receiving, shipping, accounting.
Purchases must have management approval.
Maintain a current approved vendor list.
Use competitive bids for major purchases.
Vendor purchases should be reviewed for abnormal levels.
Control methods should be implemented for duplicate invoices/purchase orders.
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