EZ-R Stats, LLC

Duplicate payments/invoices can arise due to a variety of reasons, one of the most common of those reasons is when duplicate vendors have been setup. Testing for these duplicates is a common audit activity, but can often become complex because of such things as multiple platforms, difficulty of data conversion/extraction, large processing volumes, etc. For these and other reasons, the function is sometimes outsourced.

Making the situation even more complicated, there can be instances where employees override system built-in controls. Also, judgment is required in order to identify what constitutes a "duplicate". For example, a transposed invoice number may have been entered once and then the correct invoice number entered a second time. Not all systems will detect such a duplicate payment.

Besides duplicate payments, some payments may be mis-keyed as to amount, e.g. $12,500 instead of $125.00. These types of errors can be often be identified through a review of outliers or by performing the "relative value" test.

An additional test which can be relevant in certain instances, is to obtain a distribution as to the last two digits of the invoice amount, in order to see if there appears to be rounding or other unusual patterns.

Estimates as to losses due to duplicate payments vary, ranging from as little as .1% to 1% or more. It is essential to detect when instances of this may be happening, as the dollar amounts involved can become quite large.

Audit Objective

The objective is to identify potential instances of duplicate payments and possibly determine the control weaknesses that allowed this.

Audit Procedures / Audit Program

1. Obtain invoice data in electronic format, note data elements.
2. Sort the data by vendor.
3. Perform an automated search for duplicate payments, by specifying the names of the fields, i.e. which field is the vendor, which field is the invoice number, and which field contains an invoice date.
4. Determine potential outlier amounts by vendor.
5. Summarize the data in order to determine the range of values and the variability expected.
6. For each vendor, perform a test of relative values, in order to identify potential keying errors.
7. Write a report explaining your observations, and provide conclusions and recommendations.

Example Data (Excel and Flat File)

Excel WorkBook Sheets InvoiceData
Tab separated file TestCRInvData.tab

Screen Shots of Output