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Dear William,
there are some interesting issues that might not be covered.
The answers depend on whether the various accounting and finance modules that you are using/ testing are integrated or not. I have worked on sites where the Purchasing module, Materials/ Inventory module, and the A/P module are all standalone, interfaced by software to talk to each other.
The answers also depend on whether you operate with a shared service centre or local processing at each business unit. I have seen cases where the shared service centre is a long way distant, resulting in invoices spending up to 5 days in the mail between registration and processing steps.
Is there anything we are missing?
Answer: It depends on how you configured the logic. In some practical examples I have seen, a space in an invoice number will be interpreted as a unique invoice number by the application. Example 1234 B and 1234B will be treated as two separate invoices and the duplication will not be detected in this case. The best way to catch the duplications is to set the application logic to check for duplication of vendor name, amount and invoice. Any apparent duplications should either result in an on screen warning, or an entry on a daily exception report.
Denis’ response to your query mentions the risk where PO invoices are paid as Non PO, in which case there could still arise a duplication, especially if the modules stand alone.
I have seen cases where warehouse receiving departments have been deficient or tardy in entering receiving information. This could lead to quantities received as being entered as 1, when in fact only part of the Purchase Order amount has been received. A three way match would not identify this weakness. Having a duplicate invoice control over PO Invoices would be an additional assurance that ostensibly the same deliveries are not invoiced twice.
I would also have a look at the urgent/ manual check payment processes. Some payments may slip through this way.
Are there any other ‘mitigating factors’ I can mention or enforce to support our contention?
Answer: Without knowing the full details of your operating environment, alluded to in the first two paragraphs of my answer, I would not be able to give a complete answer.
However, there is software around that will allow you to review vendor files and invoice histories, as a detective control. This type of software is used by some specialist service providers eg Protiviti Spend Risk software, to do periodic reviews on numerous parameters to detect anything unusual.
Vendor statement reconciliations are also useful as mentioned by others.
Creditor circularization is another good control.
Ensuring that only original invoices are processed and that no copies are ever processed.
What other objections or reactions could I expect to our position on ‘three-way-matching’ as an adequate control?
I think the answers before will give you some idea. For your information, I have been through clean up exercises in companies where the three way match control was being used as a single control point, and it can create an enormous mess, resulting in duplicate payments and major misstatements in month end accruals.
Good luck,
Ferdinand