What Star Wars Can Teach Us about Fraud and Recovery Audits

What Star Wars Can Teach Us about Fraud and Recovery Audits

The force is strong in AP officers. Find out why.

A long time ago in a galaxy far, far away… there was more than likely fraud and payment errors in accounts payable processes within the Death Star.  

With the imminent launch of the newest Star Wars movie, there’s no better time to look at the lessons made available to us over the years through the teachings of Yoda, C-3PO, Obi-Wan and, yes, even the man in black himself, Darth Vader. So power up the lightsaber, and let’s see what our friends from across the galaxy have to teach us about fraud, duplicate payment detection and recovery audits.

Lesson #1: “It’s a trap!” - Admiral Ackbar

Fraud runs rampant in organizations of any size. Don’t believe it? The ACFE Report to the Nations fraud study has indicated that asset misappropriations are the most common of occupational frauds. And, while their median loss of $130,000 per incident pales by comparison with the median $1 million loss for financial statement fraud, misappropriations represent an insidious fraud category that is difficult to detect without preventative, mitigating controls and ongoing monitoring. In other words, don’t fall into the trap of thinking you know your people and your vendors to such a degree that nothing can go wrong, and that fraud could never happen where you work. Chances are, it’s already there.

Lesson #2: “Fear is the path to the dark side.” – Obi-Wan Kenobi

Accounts payable professionals who let fear stand in the way of putting systems in place to detect duplicate payments and fraudulent losses are pulling their company down instead of raising it up. Engagement in early fraud and payment-error education processes acts as a buffer that could lead to fewer duplicate payments and prevent money from walking out the door. The fear of discovering what’s flawed in your AP department is real, but the education that comes from an audit is often more valuable than the losses that are recovered. So be brave and walk into the dark side of the cave—you have more to gain by facing your fears than by looking the other way.

Lesson #3: “Do or do not. There is no try.” – Yoda

Many organizations attempt to handle recovery audits, overpayment detection and risk analysis in-house. What they’re finding is that they’re not getting the results they want. That’s not surprising. The top third-party recovery audit and risk analysis suppliers have access to upward of 100 external government watch lists, as well as global companies’ address data and links to IRS and Small Business Administration databases. They have also done audits in your particular industry and have “insider” knowledge about the most common errors in AP for your type of procurement and invoices. “Cleansing” vendor lists and detecting and preventing duplicate payments are their core competency, which is why outsourcing these services offers the biggest ROI in terms of dollars, time and manpower saved. AP professionals who use third-party vendors free up their company’s workforce, allowing them to put time and effort into their areas of core competency where they can make a difference.  Read more on Accounting Today.