Over the last three decades, Accounts Payable (AP) Recovery Audits have been a widely known best practice for medium to large size organizations.  Depending on the environment, organization and unique circumstances, the Accounts Payable Audit objectives can vary.

Depending on the individual you talk with, AP Audits can have different goals. Generally, the catalyst is the recognition that there is a high likelihood of funds that belong to the company, sitting on the supplier’s books.  These funds originate from a variety of causes such as duplicate payments, returned goods credits, rebates, missed discounts and pricing errors. The amount of money and the causes are unknown until an AP Recovery Audit is conducted.

Over time, technology has contributed to the efficiency and accuracy of the payment process through ERP’s and various tools.  Additionally, Accounts Payable professionals have gained knowledge through audit projects, ERP conversion experiences and educational associations.  While the error rate has steadily declined, the volume and methods of payments have increased.   AP and finance leaders are also challenged to adapt to new technologies while being mindful of fraudsters.

There are objectives and goals for the AP Recovery Audit, these projects often bring intangible observations and results. Most often the reason(s) organizations engage an AP Recovery Audit firm are:

  • Recovery of all overpayments to suppliers – collection of funds
  • Best practice – “you don’t know what you don’t know”
  • Changes to technology – the conversion of an ERP, addition of tool(s), addition/changes to methods of payment can lead to system & process disconnects
  • Environment – changes in AP leadership, turnover in AP and/or purchasing. Staffing changes happen regularly.
  • Outsourcing to third party professionals – utilizing the technology and skills that AP Recovery Audit firms deliver on a contingency fee basis
  • Root cause analysis – auditors identify the origin of the overpayment/error thereby, validating what is working as designed, and exposing risks in internal controls that are not working.


  • AP leaders that are new to an organization often engage an AP Audit partner for visibility on the processes that are working, and where they need to focus their initial efforts in their new department. Also creates a “baseline” for goal setting.
  • The root causes of overpayments & errors present opportunities to educate staff on internal controls and the importance of following established processes.
  • Basis for discussions between Accounts Payable and Purchasing to strengthen procure-to-pay processes.

Organizations are advised to seek out AP Audit partnerships that are client-centric and have comprehensive Management Reporting including detailed findings including root cause analysis.  Process improvement recommendations should be addressed in the report and should also be verified by a client reference.

The AP Audit objectives for some organizations can also include the goal of performing these tasks in-house.  The value of the AP Recovery Audit being performed in-house enables efficiency in supplier reconciliation, the identification of overpayments/errors and process breakdowns more quickly than AP Audits conducted by a third-party.  There are also substantial cost savings – avoidance of approximately 70% of fees paid to audit firms – and the time value of money.

Strategic Audit Solutions  is a full-service audit firm specializing in Accounts Payable  & Procure-to-Pay Recovery Audits and offers a full suite of AP Audit Tools plus audit training for our client’s in-house use.

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