If not, vendor file incomplete 1099’s could be impossible ...

1 Set up vendors before any payments are made if not , vendor file incomplete 1099's could be impossible to prepare and government could be assessed fines and penalties Set up vendors before any payments are made Withhold first payment until W9 received No standards result in vendors in A/P. multiple times with different names. Consider John Henry Smith, Jr. John Henry Smith, Jr. John H. Smith, Jr. Smith, Jr., John H. Who Am I. Smith, Jr., John Henry Include LLC or Inc. or Corp if part of name Exclude articles (A or The) if part of name Forindividuals, decide if prefixes are to be included and use consistently No periods One space after each initial No apostrophes Consistent use of abbreviations American could be Am or Amer Best Accounts Payable practice is to have a standard for coding names and INVOICE.

2 NUMBERS. Set a policy and communicate that policy Limiting access also limits ability to make changes to the master files Changesshould not be made by data entry personnel System should automatically generate report detailing changes Viewedby Accounts Payable manager or other management Why cleanup vendor master files? Unused VMF take up valuable space on system Why keep vendor info from 10-20 years ago? Misspelled then misspelled now Duplicate names then duplicate names now 1. Restrict access to the VMF so that only one person (plus a back-up) can set up or change vendor records 2. Obtain a W-9 form PRIOR to vendor set-up and payment 3. Validate the TIN and vendor name using the IRS TIN matching system Training/3 4. Validate vendor address and phone number prior to vendor set-up 5. Check vendors with Federal Bureau of Industry and Security's lists of excluded persons and companies 6.

3 Establish and enforce policy for data entry formats 7. Only pay employees through A/P for accountable plan transactions 8. Purge vendors with no activity for 15 months 9. Audit changes to vendor master files 10. Written procedure manual to cover every aspect of VMF maintenance Best Accounts Payable Practices for Invoices Drives Can bog Accounts down entire Payable process if checks invoices are not handled correctly Best Practice A/P should maintain listing of all invoice approvers Acceptable Practice List of who can approve what purchases Worst Practice A/P allows anyone to approve invoices Round and round and round we go Where it stops . nobody knows o BEST PRACTICE Invoice should be routed initially to Accounts Payable A/P logs invoice in A/P sends to appropriate approver, if necessary o Make use of technology Scan those invoices in and send via email to appropriate approver o Invoice first sent to Accounts Payable also is a control against employee fraud Invoices cannot be altered WORST PRACTICE.

4 To have no policy on this issue World isn't perfect Terms on invoice do not match PO terms Partial shipments Damaged goods are delivered Prices on invoice do not match PO prices Related charges included or excluded Sales tax charged BEST PRACTICE. 3-way match of invoice, PO and receiving report Resolve differences Price difference take lower price Require PO to be filled out completely BEFORE. purchase is made BEST PRACTICE Have a policy and CONSISTENTLY use the policy In checking for No right or duplicate payments . wrong way to run by invoice code invoices numbers Best Accounts Payable Practices for Checks Resource: Communicate check schedule including cut-off points Print A/P checks on laser printer Eliminates expensive check stock Special paper can be used that is sequentially numbered and has safety features Keeplog of sequentially numbered safety paper Limit number of people who can print checks Preprintedcheck stock should be kept under lock and key and also log kept of checks used BEST PRACTICES varies by size of government Small dollar checks Two signatures best one signature plate and one manual Large dollar checks Two manual signatures required Personwho signs checks should not reconcile bank statement Internal audits Positive pay Secure.

5 Locked location Access severely limited Reinforced closet with substantial lock Sufficient segregation of duties Those with access cannot print checks Those with access cannot reconcile bank statement BEST PRACTICE. Written policy that checks will be MAILED to the Pay-To address If check is not mailed, maintain log: Check number, payee, dollar amount Date check was issued, date check paid Name and signature of person picking up the check HOW checks should be mailed Sealed envelope directly to Post Office or mail room Good Internal Control Signed A/P checks mailed by someone other than the ones printing and signing checks Source: JP Morgan Chase 500 million checks forged annually Losses expected to grow annually Ranks second to embezzlement on crimes hurting America's top 1,000 companies o Limit only to emergencies o Same people consistently have same emergencies o Eliminate duplicate payments by thoroughly checking files before rush check is issued John G.

6 Hulsey, CGFM.