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The cost of fraud in AP

by Scott Priest, Editorial Director

April 9, 2010

The latest issue of SAPinsider includes a piece by Bil Khan of SAP, namely about how SAP Invoice Management by OpenText can improve AP processes. Even if you're not using SAP Invoice Management, a few interesting points were made about how the changing nature of business has affected fraud:

[T]he complexities and scope of business operations now span the entire globe, so there are even more opportunities for fraud. The increasing global nature of business presents an even greater need for organizations to have end-to-end visibility and audit control built into their AP processes.

This may not be all that surprising -- we've been hearing about an increasingly global economy for years. What's the big deal?

The big deal is that the existing access users have to their AR/AP data, when applied to the expanding economy, nets exaggerated results:

With nearly US$1 trillion lost annually to fraudulent activities in the United States alone, and with a large percentage of corporate fraud stemming from companies’ own accounts payable (AP) employees, it’s no surprise that corporate forensic accountants are taking a much closer look at the business processes that support AP departments. Experts at the Association of Certified Fraud Examiners estimate that, on average, about US$130,000 is lost to every AP-related fraudulent act.

With companies of this scale, this may not seem like a lot -- but imagine that much per fraudulent act. For suggestions for business process improvement, check out the rest of the article.

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