Internal Controls Overview

Accounts Payable/Purchasing

This information applies if a department purchases, receives, and/or processes payments for goods and services.

Segregation of Duties - Ensure that payment documents are properly processed by having separate individuals involved in the payment process.

Suggested Practices - Have Different Individuals

• Approve purchases
• Receive ordered materials and supplies
• Approve invoices for payment
• Review and reconcile financial records

Potential Consequences of Not Segregating Duties

• Erroneous or fraudulent invoices approved for payment
• Unauthorized payments made to non-existent vendors

Accountability, Authorization and Approval - Accountability ensures that invoices, contract terms, and purchase orders are authorized, reviewed and approved.

Suggested Practices:

• Comply with applicable ASU purchasing policies
• Periodically review and update signature authorizations
• Verify receipt of goods with purchase documents and invoice information
• Reconcile official records for accuracy with transactions
• Monitor that invoices are paid timely

Potential Consequences If Accountability Does Not Exist

• Goods and services not purchased based on best value
• Unauthorized, unnecessary or fraudulent payments
• Unauthorized work performed by vendors loss of discounts due to late payments
• Charges to improper accounts
• Conflict of interest issues

Security of Assets - Purchased goods should be secured after receipt, access limited, and periodically counted and compared with official records.

Suggested Practices

• Secure goods in a restricted area
• Access to goods should be restricted to appropriate staff
• Access to keys or combination to storage area should be limited to as few people as possible
• Maintain adequate inventory records

Potential Consequences If Assets Are Not Adequately Secured

• Theft of goods
• Inventory shortages
• Additional costs incurred to replace goods

Review and Reconciliation - Confirm that you are only paying for approved purchases, and they are billed accurately. Periodically reconcile records to ensure all charges are proper.

Suggested Practices

• Review invoices for accuracy by comparing to charges and purchase documents
• Verify that goods and services have been received prior to payment
• Periodically reconcile records to ensure charges are accurate

Potential Consequences If No Review And Reconciliation

• Improper charges to your department's budget
• Disallowances for costs charged to incorrect accounts/funds
• Payments for goods and services not received