It is impossible to tell if it was by brilliant design or just dumb luck that the credit card processors have found a way to circumvent the internal controls that most organizations use in processing and approving the payment of expenses. Most vendors are not paid until their invoice goes through a number of approvals; the credit card processors just take the fee from the merchants account or withhold the funds from the payment. Most companies just make an entry recording the processing fees; usually it is done on a “it is what it is” basis. The person approving the entry usually does not understand merchant service invoices.
Before you can make write an effective Request for Proposal, you must understand what controls you now have, and what
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Does someone review and approve the monthly credit card statement (invoice) on a timely basis?
4. Does the review of the monthly invoice include a comparison of interchange rates used on the invoice with the published rates?
5. Does the review of the monthly invoice include a comparison of the markup and fees with the amount in the contract?
6. Are the credit card sales, as shown on the monthly statement, compared to the credit card sales on the books?
7. Have adequate tests been done it ensure that the credit card sales have been charged to the proper interchange category?
8. Have the deposits into the Company 's bank account been compared with amount shown on the processor’s statements as being deposited?
9. Have the computations been tested?
10. Is a summary of the average rate by month prepared and are unusual swings looked into?
The above list requires a number of comparisons be made. Whenever the comparison reveals a discrepancy, appropriate corrective action must be taken.
Control 1- Contract
Every merchant should have a copy of their merchant contract on file. We don’t just mean the two page that refer to a much larger contract. You should have a copy of the entire contract which encloses the other documents that are part of the contract like the Terms of Service and Operating Guide. You may want to download these and keep them in electronic
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If the processor is free to withdraw money from your account, how do you know that an unscrupulous employee could not do it and divert money to his account?
Control 3- Timely Approval of Monthly Invoice
The monthly statement must be approved on a timely basis. Since this does not go through the normal payment process, some companies overlook this important step. Often a bookkeeper just makes an entry every month to record the fees.
Control 4- Test Interchange Rates
We are assuming you are on interchange plus pricing. If you aren’t, that is a problem that requires some action.
It is important to test the rates use in preparing the statement with the published interchange rates. Processors often misstate rates; the difference between the published rate and rate on the invoice is often processor’s markup. The only way to know the markup is to test the rates.
Control 5- Compare Markup
Obviously, the invoices should agree with the contract; that means that the markup used on the statement should agree with contract. The same is true for the miscellaneous fees on the
ARB43, Ch.4, Par.9 ?Where evidence indicates that cost will be recovered with an approximately normal profit upon sale in the ordinary course of business, no loss should be recognized...?
Electronic confirmations are often used to verify bank balances, but they can also assist in the verification of a company’s vendors. Therefore, I am going to request confirmations from Wayland Manufacturing Company’s vendors after the client accepts my request. The electronic confirmations will prove each vendor’s existence as well as the accuracy of the accounts payable subsidiary ledger balances. Evidence collected from third-party sources must remain confidential and I maintain my integrity by only seeking evidence I am authorized to review. If I decide to request Cash electronic confirmations without consent, I am violating integrity, confidentiality, and professional due care (AU Section 330-The Confirmation Process 1998) (Arens, Elder, & Borsum 2013) (AICPA Code of Professional Conduct
During the Simply Soups, Inc. audit, we were responsible for confirming the balances for each of the company’s bank accounts. The purpose of sending confirmations is to obtain a reasonable expectation that the balances presented on the books reflect the actual values recorded by the banks, addressing any issues of existence. In addition to providing validation from a reliable source, confirmations also allow us to reconcile any issues concerning money in transit.
...is not in writing, the contract is still enforceable because the standard purchase order contains the required elements. Bill’s oral agreement serves as authorization.
In order for the SAP system to be used effectively at Novartis, they must first re-design the invoice process to better integrate with the software. Currently, the process is inefficient and is thus resulting in a backlog of overdue bills. By focusing on business processes first, Novartis can eliminate this concern, ensuring the system automatically makes payments before they are due.
Cliff A. Robb and Deanna L. Sharpe began their article “Effects of Personal Financial Knowledge on College Students’ Credit Card Behavior” with clarification regarding the study and also a succinct historical introduction to the ‘invasion’ of credit card companies on college campuses. Their study was based on the analysis of survey data composed from 6,520 students at a grand Midwestern University. This study revealed that financial knowledge was a compelling factor in the credit card decisions regarding college students.
Let’s go in to details of entering an expenses and closing it off by year end so we can understand how they did it to avoid being suspicious for their bookkeepers and it should be polished nicely
money is spent then the shopper has on the current account, the last written check will be rejected and account will be
According to Wolfe and Hermanson, a fraud cannot happen if one of these elements is missing. The first element; incentive is the first step to committing a fraud. This is the reason why someone will think about committing fraud, some of the examples they showed were employment stress, greed, personal debts and financial problems. In the case of Wells Fargo, employees were asked to increase the number of accounts each client had in order to increase sales and if they did not meet those numbers, they were going to be punished; therefore, the incentive of the employees to commit fraud was not getting more money, or personal reasons but instead they wanted to enhance the sales and prevent getting
With the implementation of such a system that can handle appointment scheduling, payment tendering, settlement, and rate change management which PepsiCo had desired, PepsiCo will be able to have a sole server for accessing freight audits and payments that previously took up to a month before the centralized accounts payable. Before such a system could be fully implemented, each audit cost PepsiCo $25-$28 per invoice to pay each freight bill (Web, 2014). With more than 90,000 invoices per year, the costs quickly add up. Completely eliminating these costs with the system Pe...
On October 7, 1998 the Department of Justice announced it’s intent to sue Visa and MasterCard on antitrust grounds. U.S. Attorney General Janet Reno said, “The Justice Department’s antitrust division found persuasive and systematic evidence of the harm done to competition in the credit card market. Competitive initiatives that could benefit consumers have been abandoned, delayed or suppressed. Consumer choice has been reduced, and competition among card networks has been substantially restrained”(American Express Company, 2000, 1).
Formalities – if formalities are prescribed for the formation of the contract , they must be observed.
The next advantage is the bank will get a fixed amount of repayment and charges from penalty fees, late fees or over-the-limit fees. With banks and same institutions, a major source of non-interest income is the fees according with the management of customer accounts. For instance, a financial record may be organized to permit a little charge to be charged from the client's record on a month to month premise. It is also called an administration charges, is use to return for such assignments as presenting charges and credits on the record and supplying the client with a month to month articulation of record.
2. Should the component costs be figured on a before tax or an after tax basis?
For example: if the company’s sales are made through sales representative who earn 10% commission. (The commissions for each calendar month’s sales are paid on 15th day of the following months). If the company’s has $60000 of sales in December, the company will pay commission of $6000 on Jan 15. The matching principle requires to records $6000 commission expenses on the December income statement along with December sales of $60000. (accounting coach, 2016)