Key elements essential for an effective vendor fraud prevention program include each of the following practices, EXCEPT:
Correct Answer: B
TheVendor Master Filetopic in the APS Certification Program emphasizes fraud prevention through robust vendor validation processes. Key practices include confirming a vendor's physical address, checking government sanction lists (e.g., OFAC), and requiring a W-9 to verify tax identification numbers (TINs). However,verifying that vendors are bonded(i.e., insured against financial loss) is not a standard requirement for vendor fraud prevention, as it is more relevant to specific industries (e.g., construction) and not universally applicable. * Option A (Confirmation of a physical address): Verifying a physical address ensures the vendor is a legitimate entity, reducing the risk of fraudulent shell companies. This is a key practice. * Option B (Verifying that vendors are bonded): Bonding is not a standard AP requirement for fraud prevention. It may apply to certain vendors (e.g., contractors), but it is not essential for all vendor fraud prevention programs. This is the correct answer. * Option C (Checking government sanction lists): Checking lists like OFAC (Office of Foreign Assets Control) ensures compliance with regulations and prevents payments to sanctioned entities, a critical fraud prevention step. This is a key practice. * Option D (Requiring a W-9): A W-9 provides the vendor's TIN, enabling verification with the IRS to prevent fraudulent identities and ensure tax compliance. This is a key practice. Reference to IOFM APS Documents: The APS e-textbook underVendor Master Filelists "confirming physical addresses, checking sanction lists, and requiring W-9 forms" as essential for vendor fraud prevention. It notes that "bonding is not a universal requirement for vendor validation,though it may be relevant for specific contracts." The training video emphasizes vendor verification processes, highlighting address checks, sanction list reviews, and W-9 requirements but not bonding.
Question 2
Ways to reduce the cost of processing an invoice include:
Correct Answer: C
Reducing the cost of invoice processing involves streamlining workflows and minimizing labor-intensive tasks. Reducing paper handling (e.g., through e-invoicing or digital workflows) and manual data entry (e.g., through optical character recognition or automation) are proven methods to lower costs. Eliminating the approval process entirely (Option I) is not a recommended practice, as it increases the risk of errors and fraud, undermining internal controls. The web source from NetSuite states: "Automation and digitization can significantly reduce invoice processing costs by minimizing manual data entry and paper-based processes... Technologies like OCR and e- invoicing reduce the need for physical handling and manual input." The Esker source adds: "Reducing paper handling and manual data entry are key to lowering AP processing costs, as they eliminate time-consuming tasks." These sources confirm that Options II and III are effective cost-reduction strategies, while Option I is not supported, as approvals are a critical control. The IOFM APS Certification Program covers "Invoices" and "Technology and Automation," emphasizing efficient invoice processing. The curriculum's focus on "peer-tested best practices" includes adopting automation to reduce manual tasks, aligning with Options II and III. References: IOFM Accounts Payable Specialist (APS) Certification Program, covering Invoices and Technology and Automation NetSuite: "Automation and digitization can significantly reduce invoice processing costs by minimizing manual data entry and paper-based processes" Esker: "Reducing paper handling and manual data entry are key to lowering AP processing costs"
Question 3
What does the acronym 'ASP' stand for?
Correct Answer: B
In the context of technology and accounts payable, the acronymASPstands forApplication Service Provider, which refers to a third-party provider that delivers software applications over the internet, typically on a subscription basis. This is distinct from automated secure processing (Option A), accounting standards protocol (Option C), or accrual statement period (Option D), which are not standard terms in this context. The web source from NetSuite states: "An Application Service Provider (ASP) delivers software applications over the internet, allowing businesses to access tools like AP automation without on-premises infrastructure." This directly supports Option B. The IOFM APS Certification Program covers "Technology and Automation," including cloud-based and hosted software solutions like those provided by ASPs. The curriculum's focus on "peer-tested best practices" aligns with understanding ASPs as a delivery model for AP tools. References: IOFM Accounts Payable Specialist (APS) Certification Program, covering Technology and Automation NetSuite: "An Application Service Provider (ASP) delivers software applications over the internet"
Question 4
Good vendor master file practices include each of the following, EXCEPT:
Correct Answer: D
TheVendor Master Filetopic in the APS Certification Program outlines best practices for maintaining an accurate and efficient VMF. These include verifying vendor data, blocking inactive vendors, and consolidating duplicates to prevent errors and fraud.Deleting and re-entering vendors that moveis not a good practice, as it disrupts historical data and audit trails; instead, the VMF should be updated with the new address. * Option A (Having a vendor verification program): A good practice, ensuring vendors are legitimate through TIN matches, address verification, and sanction list checks. * Option B (Blocking inactive vendors after a certain period): A good practice, preventing accidental payments to dormant vendors while retaining their data for records. * Option C (Finding and consolidating duplicate vendors): A good practice, reducing errors like duplicate payments by merging redundant vendor records. * Option D (Deleting and re-entering vendors that move): Not a good practice. Deleting and re- entering disrupts transaction history; updating the address is the correct approach. Correct answer. Reference to IOFM APS Documents: The APS e-textbook underVendor Master Filestates, "Best practices include vendor verification, blocking inactive vendors, and consolidating duplicates,but deleting and re- entering vendors for address changes is inefficient and risks data loss." The training video emphasizes, "Update vendor addresses in the VMF rather than deleting records to maintain audit trails."
Question 5
Ways in which an organization could suffer from check fraud include which of the following: I. Check alteration; II. Invalid payments; III. Stolen issued checks.
Correct Answer: A
TheInternal Controlstopic in the APS Certification Program emphasizes fraud prevention, including check fraud, which is a significant risk in AP due to the handling of payments. Check fraud can occur throughcheck alteration(modifying payee or amount),invalid payments(payments to fraudulent vendors or for unauthorized transactions), andstolen issued checks(checks intercepted and cashed fraudulently). All three are recognized methods of check fraud. * Item I (Check alteration): Altering a check's payee, amount, or date is a common fraud method, often mitigated by controls like positive pay. This is a valid way. * Item II (Invalid payments): Payments to fictitious vendors or for unauthorized purposes (e.g., duplicate invoices) constitute fraud, often enabled by weak vendor validation. This is a valid way. * Item III (Stolen issued checks): Stealing issued checks (e.g., from mail) and cashing them fraudulently is a well-documented fraud risk, mitigated by secure check handling. This is a valid way. * Option A (I, II, and III): Correct, as all three are ways organizations suffer from check fraud. * Option B (II and III only): Incorrect, as Item I is also a valid method. * Option C (I and III only): Incorrect, as Item II is also a valid method. * Option D (I and II only): Incorrect, as Item III is also a valid method. Reference to IOFM APS Documents: The APS e-textbook underInternal Controlslists "check alteration, invalid payments to fraudulent vendors, and stolen checks" as common check fraud methods. It emphasizes controls like positive pay and secure check storage to mitigate these risks. The training video discusses check fraud scenarios, citing all three methods as prevalent in AP processes.
