Identifying Red Flags in an Accounts Payable Environment: An Experiential Learning Exercise

• In Event: Teaching, Learning and Curriculum 2

Abstract

The Accounts Payable system at a company is extremely important. This is the system that handles payments to entities to which the company owes money for goods and services bought on credit. These entities include suppliers, consultants, and others. It is absolutely necessary that controls are in place and procedures followed to protect the integrity of this system and to assure that a company does not approve and disburse funds on fraudulent requests for payment. This paper defines the Accounts Payable system, controls that should be in place, and discusses an experiential learning exercise (comprised of a real world set of events). The exercise emphasizes the importance of implementing and following good practices and internal controls in the Accounts Payable environment and of identifying red flags (i.e., warning signals) that might indicate that something is amiss.

Authors

• Cheryl Langford Prachyl, University of Dallas

• Liz Mulig, University of Dallas

• Donald R. Burg, Independent Consultant in Fraud Prevention and Detection