Auditing for Value in the Procure to Pay Cycle Dallas IIA Chapter

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Example Usage of BenchmarkingP2P Metric ConsiderationsThere are various cost drivers within the overall Purchase-to-Payment process where use ofbenchmarks against industry best practices to determine improvement opportunities.Cost Components of the Purchase-to-Pay Process% of Sub Process100%90%80%70%60%50%40%30%20%10%0%CreateExisting VendorVMF SetupWorkflowManualApprovalProcessBuyer Manager Director VPE-Mail EDI Mail Fax PhoneCentralized De-CentralizedApproval Level PO Issuance InvoiceReceived• 50% of transactions are processed outside of existing workflow technology• 65% of POs are issued by mail or phone• 25% of invoices are received in a de-centralized locationManual EDI ERS P-CardInvoiceProcessingObservations‣ The following processes contribute to increased costs within the Purchase-to-Payment ProcessCheck Wire ACH OtherPaymentProcessingCentralized De-CentralizedProcumentFunction• 50% of invoices are processed manually through Accounts Payable• 58% of all payments are remitted by paper check19 © 2009 Protiviti Inc. An Equal Opportunity Employer.CONFIDENTIAL: This document is for your company's internal use only and may not be copied nor distributed to another third party.
Value Drivers Within P2P ActivitiesPossible IdeasComponents & Value DriversProcure-to-Pay• Increase DPO• Reduce AP Processing Costs• Reduce Lost Discounts• Reduce Financial Leakage• Reduce Spend / TCOIncrease DPO Improve integrity of Vendor Master File Monitor and enforce use of approved Payment Terms – extend where feasible Update existing agreements upon expirationReduce Invoice Error Rate / Processing Costs / Lost Discounts / Leakage Standardize (and consolidate) AP processes Increase use of Purchase Orders to automate matching process (decrease Payon-Approvalvolume) Leverage ERP functionality / automate manual process Enhance supporting capabilities Develop / improve monitoring and reportingReduce Spend / Total Cost of Ownership (TCO) Strategic Sourcing (Total Cost of Ownership (TCO), leverage volume, specificationimprovements, global sourcing, etc.) Manage contract complianceImprovements in Working Capital Management can freeup cash and generate significant annual savings andimpact to the bottom line!20 © 2009 Protiviti Inc. An Equal Opportunity Employer.CONFIDENTIAL: This document is for your company's internal use only and may not be copied nor distributed to another third party.
Page 1 and 2: Auditing for Value in the Procure t
Page 3 and 4: Overview of ProcurementMost organiz
Page 5 and 6: Trends in Internal Audit Focus / Co
Page 7 and 8: Internal Audit Coverage Considerati
Page 9 and 10: Potential Focus Points and Impact O
Page 11 and 12: Data Analysis Approach OverviewProj
Page 13 and 14: Example Output and Analysis Results
Page 15 and 16: Example Output and Analysis Results
Page 17 and 18: Procurement Process ReviewFraud Ind
Page 19: Selected Accounts Payable MetricsCo
Page 23 and 24: References• Invalid Social Securi

Auditing for Value in the Procure to Pay Cycle Dallas IIA Chapter

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