Duplicate Invoice Payments

Transcription

1 Duplicate Invoice Payments David Macleod Internal Auditor Falkirk Council 4 December 2014 IDEA Scottish User Group 1

2 Outline of Presentation Background Risk Data Use of IDEA Findings 4 December 2014 IDEA Scottish User Group 2

3 Around 7,000 employees across the Chief Executive s Office and four Services: Corporate & Neighbourhood; Development; Education; and Social Work Supports Falkirk Community Trust The 2014/15 budgets for the Council are as follows: Revenue Budget = 329,354,000 General Capital Programme = 21,170,000 Housing Revenue Budget = 54,434,000 Housing Capital Investment = 36,533,000 (The council has a housing stock of approximately 16,000 properties.) 4 December 2014 IDEA Scottish User Group 3

4 Background Integra Finance System Used by Falkirk Council since users throughout the Council and Falkirk Community Trust Users have different permissions (e.g. read only, data entry, approval) Various integrated modules including ledger, purchasing and creditors Payment files are generated via the creditors module Payment runs every Monday, Wednesday and Friday 4 December 2014 IDEA Scottish User Group 4

5 Extract from Falkirk Council Financial Regulations (Section 15.5) The Officer certifying an invoice or other payment must be satisfied that: The goods or services have been received and are of the agreed quantity and quality; The invoice price matches the agreed price; The arithmetic is correct including discounts, credits, and VAT; Appropriate entries have been made in inventories or stock records; The invoice has not previously been authorised for payment; The invoice is in the name of Falkirk Council (or an integral part of it); and The invoice is a proper liability of the Council. 4 December 2014 IDEA Scottish User Group 5

6 Extract from Falkirk Council Financial Regulations (Section 15.6) Care must be taken not to make duplicate payments, especially if the invoice is a fax, copy invoice, or photocopied invoice. Payments must not be made on the basis of supplier s statements. 4 December 2014 IDEA Scottish User Group 6

7 Risk Reasons for duplicate creditor payments Paid to incorrect suppliers e.g. Emergency Planning College instead of Emergency Planning Society; or Scottish Power instead of Scottish Gas. Payments made on copy invoices or delivery notes Paid to the same (correct) supplier twice 4 December 2014 IDEA Scottish User Group 7

8 Examples of Non-Exact Invoice Numbers VP M12101 and VP M12101NK and C and S671 and S671A OP/IO69386 and OP/ and and and and December 2014 IDEA Scottish User Group 8

9 How it was known that duplicate payments were occurring Contact (and reimbursement) from suppliers Checks by Creditors team on exact matches This resulted in: Concern that some duplicate payments were not being detected 4 December 2014 IDEA Scottish User Group 9

10 Payments File Report Creditor Reference Supplier Reference Internal Number Location Invoice Date Due Date Payment Date Gross VAT Payment Method Payment Reference Narrative Supplier code on Integra Invoice number Unique reference Section / establishment Total amount of invoice VAT amount BACS or Cheque Details of invoice 4 December 2014 IDEA Scottish User Group 10

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12 Data 10,000+ active suppliers on supplier database Annual volume of payments via Integra = 170,000 Annual net value of payments via Integra = 278 million A rolling 12 month period is reviewed each month 4 December 2014 IDEA Scottish User Group 12

13 Use of IDEA Run payments file report on Integra Import to IDEA using Report Reader Join payment file with Active Suppliers to identify supplier name Join combined file with Locations to determine location description 4 December 2014 IDEA Scottish User Group 13

14 IDEA Duplicate Key Detection Apply the duplicate key detection function based on: Invoice date and gross amount [approximately 60,000 results]; Supplier reference and gross amount [approximately 1,500 results]; and Supplier reference (as numeric format) and gross amount [approximately 58,000 results]. 4 December 2014 IDEA Scottish User Group 14

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16 IDEA Duplicate Key Detection Review results and copy any potential duplicates to a spreadsheet. Split the file into various value ranges by applying a criterion of Gross amount is greater than x and is less than y. Look for duplicates where at least one payment is in the most recent month. To convert supplier reference field to numeric format use field manipulation to append a column and apply the (Supplier Reference). Apply the duplicate key detection using this appended column and gross amount. 4 December 2014 IDEA Scottish User Group 16

17 Value Ranges 0.00 to 100; 100 to 200; 200 to 300; 300 to 400; 400 to 500; 500 to 1,000; 1,000 to 2,000; 2,000 to 3,000; 3,000 to 4,000; 4,000 to 5,000; 5,000 to 10,000; 10,000 to 20,000; 20,000 to 50,000; and Over 50,000 4 December 2014 IDEA Scottish User Group 17

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19 Duplicate Invoices Check the identified duplicates to Integra for credit notes or refunds. Obtain copies of the invoices from the Creditors section for the remaining duplicates. Review the invoices to determine if the payments are, in fact, duplicates. Check with the Creditors team whether they are aware of any of the remaining duplicates and are in the process of recovering them. Report the remaining duplicates to Finance. Provide copies of the relevant invoices to the Creditors team to enable recovery action. Record the details of all reported duplicates on a spreadsheet and check to ensure that these duplicates are being recovered. Recovery is normally via credit note or by refund. 4 December 2014 IDEA Scottish User Group 19

20 Findings Since October 2010, a total of 283 duplicates (to October 2014) have been identified. Cumulative gross value = 211,057 For 2014/15 (to October 2014), a total of 50 duplicates have been identified. Cumulative gross value = 51,017 4 December 2014 IDEA Scottish User Group 20

21 Year Number of Duplicate Payments Cumulative Gross Value To 2010/ , / , / , / , / , Total , December 2014 IDEA Scottish User Group 21

22 Duplicate Payments Almost all duplicates have been recovered. As at 1 December 2014, only 11 recently reported duplicates are still outstanding. If necessary, the Creditors team provide additional training to Integra users who have processed the duplicate payments. To avoid duplication, the Creditors team have stopped conducting their own checks. 4 December 2014 IDEA Scottish User Group 22

23 Duplicate Payments COSLA and the Scottish Government recently provided with details of the process followed at Falkirk Council. This is an example of an activity that can help to improve the detection of fraud and error at relatively low cost. 4 December 2014 IDEA Scottish User Group 23

24 Conclusion A value adding activity that has resulted in the recovery of more than 200,000 of expenditure that would otherwise have been lost to Falkirk Council. 4 December 2014 IDEA Scottish User Group 24

25 Thank you and Any Questions? 4 December 2014 IDEA Scottish User Group 25