Categorized in: Center for Government Innovation Local governments

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Published: February 24, 2022

Disbursing duplicate payments to vendors for the same goods or services can be costly for your government. According to industry experts, the number of duplicate payments organizations make ranges from .8 percent to 2 percent of their total payments. These percentages might seem small, but they can reflect thousands of dollars being paid to vendors in error.

There is no single internal control you should have to prevent duplicate payments, rather, it requires many different internal controls to protect your government from these losses. This is because duplicate payments can occur in many ways.  

Some organizations use a specialized audit company to target duplicate payments. These companies work on a contingency basis, so there are no up-front, out-of-pocket costs. If they don’t find anything, you get some peace of mind that your controls appear to be working well. If the auditor finds duplicate payments, your government benefits in the recovery. Additionally, it gives you an opportunity to identify any underlying causes and improve your internal controls.

We cover duplicate payments extensively in SAO’s Accounts Payable guide and strongly urge you to read it, including the appendix that lists out internal controls for preventing and detecting duplicate payments.

Here are some trouble spots and advice on how to improve your internal controls:

  • Duplicate vendors in your vendor master file are risky business. If your vendor master file has duplicate vendor records, you increase the risk of making duplicate payments. That’s because most software controls will only detect a duplicate invoice number within the same vendor number, and it can make it hard for staff to look up prior payments. So, limit your vendor master file to one record per vendor. If it’s gotten messy over time, clean it up and then keep it clean! The best way to keep it clean is to limit access for maintaining the vendor master records to one or two people.
  • Decentralized data entry = too many cooks in the kitchen. When staff in various departments enter invoices, you introduce risk. Different departments might each enter the same invoice and they might enter invoice numbers inconsistently, unknowingly bypassing software controls. It’s best to keep accounts payable processing centralized and limited to as few employees as possible and provide them the training and oversight they need to be effective.
  • Duplicate payments don’t command the attention they deserve. When accounts payable employees find duplicate invoices or payment requests, they should alert management. Then you can take steps to identify the underlying causes of the duplicates and address them. If vendors are at fault, follow up with them. If they sent you duplicate invoices, ask them to stop. Check their payment history to be sure other duplicate payments did not slip through and monitor the vendors closely going forward. If internal factors are at play, such as managers approving the same invoice twice, then deal with this directly, too. In this case, you might call the managers and ask how you can help them set up a better tracking system for their approvals.
  • Accounts payable staff are your gatekeepers. If employees identify duplicate payments and prevent them from being paid, recognize them for their efforts! It will encourage them to be extra diligent and identify more!

Resources that might help you improve your accounts payable processes

Remember, SAO is here to help you. If you have specific technical accounting questions, submit them using our HelpDesk in the client portal.

We also have financial management specialists at the Center available to talk with you about best practices, resources or internal controls. For assistance, reach out to the Center@sao.wa.gov.

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Categorized in: Center for Government Innovation Local governments

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