The procedures which are being Investigated In are for HANK. 2. How the report was achieved The report was achieved by gathering information from the Assistant Financial Director, Senior Finance Manager, spending 2 days working in the Accounts Payable Team and the Purchasing Team and reflecting to Work Related Learning 1 and 2. 3. Key Issues investigated The key Issue being Investigated Is the current Purchase Ledger System: authorization -preparation for payment -payment methods -manual payments -internal control system 4. Key findings -Invoice

The Purchase Ledger System for HANK is one of the best systems available at the moment. The PACT Is loosing quite a lot of money due to not paying Its Invoices In time and missing out on early payment discounts. The delay Is caused by authorizes signatories not selling off the Invoices wealth the time Limit needed to qualify for the early payment discount. In addition to missing out on early payment discounts they are also losing money through interest being charged to their account for late payments. 1. 5. Key recommendations – The PACT needs to cut down on the number of people who authorize invoices.

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Train and make people who are authorizes signatories aware of the early payment discounts. – Introduce a system which monitors and run a report of all Invoices which are due for payment to avoid being charged Interest for late payment. Introduce an electronic system for authorization of Invoices and purchase orders. The system will be a good Investment as It will cut out most of the paper work. How It will work is that if an invoice is received it is scanned to the system and posted to the appropriate cost centre Ana account under Ana an email well De sent automatically o the authorizes signatory of that cost centre to approve the invoice.

Once the invoice is approved it will be automatically paid on the next payment run. Using electronic authorization system will cut out all the paper work and enable invoices to be authorizes as soon as they are authorizes or avoiding invoices being lost or sent to wrong department or site as most of the authorizes signatories work in different hospitals, clinics and in the community. The implementation of the electronic authorization system and training will cost the Trust around IEEE,OHO which is not that expensive compared to the benefits it will bring.

Last year only the Trust lost around EYE,OHO on early payment discounts and EYE,OHO on late payment interest. – Internal control of the purchase ledger system needs to be monitored and followed as at the moment no one really follow the correct procedures, monitor or chase outstanding invoices which are waiting for authorization. – The Trust still pay a substantial number of its suppliers by queue, this system is open to fraud and delays payment to suppliers that loosing out on early payment discounts and incurring late payment interest.

Trust should set a new procedure for the existing appliers to change all queue payments to BACK payment and for new suppliers there will be only one option of paying by BACK only. – The trust should develop a training programmer for purchase ledger process for non-finance staff so that they understand the whole purchase ledger process, as most of the authorizes signatories are non-finance staff and they come from nursing background. 3. 0. RISK ANALYSIS AND FRAUD 3. 1 .

Invoice authorization The following documents are received by the Creditor Payments section of the Finance Department, date stamped and distributed to the appropriate member of Taft, who files them together in alphabetical order of supplier name prior to payment: Invoices and credit notes Purchase orders (yellow copy) Goods received notes (pink copy) Part delivery advice notes Copies of contracts/price lists. When an invoice is received, the purchase order and GRIN are attached to it and send to the budget holder or authorizes signatory of the relevant cost centre.

The following checks are then made:- Only the goods ordered have been received and charged for The price is as quoted on the order The GRIN has been signed by an authorizes signatory other than the person ho has ordered the goods For manually produced invoices, that the arithmetic is correct. The manager checks, signs and dates the invoice, and returns it for payment. In the case of a price query, they also confirm that the price is correct. The original copies of the authorizes signatory lists are kept in the Creditor Payments section.

These show the employees who are authorizes to sign various financial documents, including invoices and Grins. Only signatures included on these lists are accepted as authorization for payment of an invoice. Any discrepancy or query is investigated promptly. If the problem is not resolved thin a reasonable period of time such that payment targets will not be met, the supplier is informed why payment is delayed. There is a risk that a budget holder can order personal staff using the trust money as he is the one who authorize the invoices for payment.

There should be a team which monitors or check if items which are being ordered are actually wanted or going to be used in the Trust. When an authorizes signatory is off sick or on holiday this means the invoices the invoices for that cost centre are on hold which means loosing money on early payment discounts and incurring interest due to late payment. . 2. Preparation for payment Once an invoice is checked and cleared for payment, it is registered on the Purchase Ledger. The document date used is either the date of the GRIN or the date the invoice was received by the PACT, whichever is the later.

This ensures that the Public Sector Payment Policy calculations are correct. The invoice is stamped with a rubber stamp and the following information inserted in the spaces provided:- Purchase Ledger reference Purchase Ledger supplier number If VAT is reclaimed, the Purchase Ledger VAT code is used If only part of the VAT is paid, the amount Initials of the member of staff registering the invoice Date of registration The invoice is then passed for payment by a different person from the one whom completed the checks and registered the invoice.

The invoice is then initialed by this person. It is the responsibility of the Accounts Payable Manager to ensure that this separation of duties happens. 3. Payment Method Can supplier In ten Purchase Ledger Is set up Walt one AT tender detail moment BACK – payment is directly into the supplier’s bank account, and is therefore the preferred method of payment for non-NASH suppliers Payable orders – for where he PACT has no bank details or the payment is urgent RAFT – payment is transferred directly between POGO accounts, and is therefore used for all NASH suppliers.

These defaults may be overridden for individual payments if required that’s creating a risk of someone inserting fraudulent payment details. The Trust still pay a substantial number of its suppliers by payable orders (cheeses), this system is open to fraud and delays payment to suppliers while waiting for the cheeses to be signed which means loosing out on early payment discounts and incurring late payment interest.. 4. Manual payments Manual payable orders may be generated for very urgent payments if required. This is at the discretion of the Accounts Payable Manager.

A manual payments voucher, which includes a remittance for the payee, is completed by the appropriate Accounts Payable Assistant and any backing papers attached to it. A POGO payment schedule detailing the payees’ names and amounts to be paid is written out and submitted with the payable orders and manual payments voucher to two POGO authorizes signatories. They both sign the schedule, as well as the payable order Finance Procedure. The schedule is then faxed to the POGO and the payable orders posted to the payees. The payment details are then registered on the Purchase Ledger by the Accounts Payable Manager and shown as manual payment.

The Trust still pay a number of its suppliers manually by queue and this system is open to fraud as the cheeses are signed by directors who do not have time or have got little time to check and investigate if the payments are legitimate. This system can encourage ghost suppliers to be created or someone forging signatures. 5. Internal Control System A key object of the month end procedures is to list, check and verify information on he Purchase Ledger before the transfer to the General Ledger is made. Three reports are generate EAI Ana uses to scene ten data – control Report, Ledger Print Ana Unconsolidated.

On satisfactory agreement of the monthly checks, the Systems Accountant processes the Month End Update from the Purchase Ledger. 4. 0. Continuous Professional Development An effective way of making sure that the internal control system and procedures for the Trust are to be followed is to make sure that all staff is receiving the relevant training they need for their Jobs. It has been proven before that if the employees develop the organization will evolve and if the employees do not develop the organization will not develop. . 0. Conclusion moment. The PACT is loosing quite a lot of money due to not paying its invoices on time and missing out on early payment discounts as well as incurring interest on late payments. The Trust has got good internal control system which will work well if its being followed, therefore they need to monitor and make sure everyone is following the policies. Budget managers and authorizes signatories need to be trained and made aware of advantages of paying invoices early and disadvantages of paying invoices late.