What is the most effective way to conduct an invoice audit?

1 Prepare and plan

Before you start an invoice audit, you need to prepare and plan your scope, objectives, criteria, and methods. You should define what types of invoices you want to audit, such as high-value, high-risk, or random invoices. You should also determine what aspects of the invoices you want to check, such as dates, amounts, taxes, discounts, terms, and approvals. Moreover, you should establish your audit standards and benchmarks, such as policies, contracts, and regulations. Finally, you should choose your audit tools and techniques, such as software, spreadsheets, or manual reviews.

2 Collect and organize

The next step is to collect and organize the invoices and related documents that you need for the audit. You should request or retrieve the invoices from the vendors or suppliers, as well as the supporting documents, such as purchase orders, receipts, delivery notes, and contracts. You should also gather the internal records and data that you need to compare and verify the invoices, such as budgets, accounts payable, and inventory. You should then sort and categorize the invoices and documents according to your audit criteria and scope.

3 Analyze and validate

The core step of the invoice audit is to analyze and validate the invoices and documents for accuracy, completeness, and compliance. You should use your audit tools and techniques to check for any discrepancies, errors, fraud, or non-compliance in the invoices and documents. For example, you should look for duplicate invoices, incorrect amounts, unauthorized charges, missing information, or mismatched terms. You should also cross-check the invoices and documents with each other and with your internal records and data. You should document and report any findings and issues that you discover.

4 Communicate and resolve

The final step is to communicate and resolve any findings and issues that you identified in the previous step. You should contact the vendors or suppliers to clarify, confirm, or dispute any discrepancies, errors, fraud, or non-compliance in the invoices and documents. You should also negotiate and agree on any adjustments, corrections, refunds, or penalties that are necessary to resolve the issues. Moreover, you should update your internal records and data to reflect the changes and outcomes of the audit. You should also follow up and monitor the vendors or suppliers to ensure that they comply with the agreed terms and actions.

5 Review and improve

An invoice audit is not a one-time activity, but a continuous process of improvement. You should review and evaluate the results and performance of your invoice audit regularly. You should measure and report the benefits and costs of the audit, such as savings, recoveries, risks, or efficiencies. You should also identify and address any challenges or gaps in the audit process, such as data quality, resources, or skills. Furthermore, you should seek and implement feedback and suggestions from the vendors, suppliers, and other stakeholders to improve the audit process and relationship.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?