| The above
scenario could apply to just about any business that
maintains few or poor internal controls over its
deliveries. Of course, other problems could have
caused such budget woes: The supplier simply may not
have cared about making accurate deliveries, or your
client could have fallen victim to a common fraud
scheme in which a vendor ships products that weren’t
ordered but will be paid for at inflated prices.
After getting away with it once, crooked vendors
know your client has poor internal controls and that
she just assumes she ordered the items, they were
delivered and she should pay the bill. A third
possibility: Her employees could have been checking
in orders but stealing the inventory. If your client
can’t afford an expensive internal control system,
here are some defensive measures she can choose from
to ensure proper handling of deliveries. She can
Use numbered purchase orders when buying
goods, and issue to employees who receive
items (a kitchen manager or prep cook, for
example) a list of these numbers to verify an
order was actually placed. Ask
the supplier to include purchase order numbers on
the packing slip. Receiving workers then accept
only goods they can verify against the purchase
order list. However, this doesn’t involve counting
the goods received. Caution: If purchases
under a certain dollar amount do not require any
verification, crooks can take advantage of this.
For example, if your client’s approval level is
$500, a dishonest supplier might ship orders
around $450 on a regular basis. Even worse, the
crook could just send her a bill for an amount
below the threshold and never send any products at
all.
Give receiving workers copies of
original purchase orders to compare with the
packing slips. While the first
tip helps your client verify she ordered the
goods, it does not provide assurance regarding the
quantities involved. Using this measure, the
receiving employees can compare the quantity on
the purchase order with that on the packing slip.
Caution: Your client still won’t know
whether the supplier delivered everything it was
supposed to unless employees actually count the
goods delivered.
Assign an employee who does the
accounting the task of comparing the purchase
orders with the packing slips.
Your client can use this low-cost
procedure for some minimal protection against
theft. Segregating duties by having someone in
accounting, instead of a receiving worker, compare
purchase orders with packing slips adds a level of
assurance. Caution: Remind your client
the supplier can manipulate the data on a packing
slip to suit its needs.
Provide receiving workers copies of the
original purchase orders but with the
quantities ordered blanked out.
Your client could require employees
not only to compare the purchase order with the
packing slip, but also to fill in the quantities
of goods received. She also can request the vendor
not include a packing slip with the items. In this
way, the receiving employees won’t have any idea
how many items your client expects. Caution:
These tasks take a long time and, therefore,
are costly.
Give the receiving employees copies of
the purchase invoices—and on a random basis,
erase the quantities. This
approach has the advantage of minimizing the time
and cost of checking in all deliveries yet
provides a higher level of control. If the workers
regularly perform this random counting, the
process should provide feedback on whether the
supplier properly delivers goods on a regular
basis. Your client could reduce her exposure to
large losses by blanking out the quantities for
more expensive products, thus requiring receiving
employees to verify these items.
Have someone in accounting match the
packing slips to the original purchase orders
and verified receiving reports.
This helps to ensure your client
pays agreed-upon prices only for goods ordered and
received. The procedure also keeps tabs on whether
receiving employees are checking in deliveries
with care. While none of the above
measures can guarantee the complete elimination of
losses, they can help to limit them.
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2019 State of Financial Reporting Survey
What RPA is and how it works