Fulcrum way webinar top 10 advanced control to improve bottomline oct 22 2013

Top 10 Accounts Payables Control to Improve the Bottom-Line
FulcrumWay Leading Provider of Enterprise Risk Assessment Mitigation and Remediation Solutions

Enterprise Risk Management

Financial Close Monitor

Advanced Controls Catalog

Enterprise Audit

GRC Monitor

Swarnali Bag
Product Strategy, Oracle
Corporation

Leverage Technology:
Move Your Business Forward™
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Copyright ©. Fulcrum Information Technology, Inc.

The following is intended to outline our general product
direction. It is intended for information purposes only,
and may not be incorporated into any contract.
It is not a commitment to deliver any material, code, or
functionality, and should not be relied upon in making
purchasing decisions. The development, release, and
timing of any features or functionality described for
Oracle’s products remains at the sole discretion of
Oracle.

2

Copyright © 2013, Oracle and/or its affiliates. All rights reserved.

Confidential – Oracle Internal

Program Agenda
 Introduction
 Top 10 Challenges Addressed by Advanced Controls

 Oracle GRC Advanced Controls Solution
 Case Study
 Q&A

3



What Do We Mean by Control ‘Issues’
• Issues with a definite impact on the bottom line
Example: Duplicate Vendor Payment

• Issues with a potential impact on the bottom line
Example: Split Purchase Order
• Issues with Cash Flow Impact on the bottom line
Example: Incorrect Vendor Payment Term

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Financial Impact
 Duplicate pays – often not huge amounts of $$

individually
 What’s the big deal?
1. They add up!
2. Impact on sales
3. Impact on EPS
4. Prevent fraud and the honest mistakes

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5



Impact on Sales
UNINTENTIONAL ERRORS AND LEAKAGE
Global, Fortune 500 Firm, High-Tech
• Over 4 Quarters, consultants found $17.5M in payment
errors

Profile
 Centralized Payables Operation
 Well Staffed
 Clean Sox Audit

Post Audit Recovery
 $17.5M Total Payment Errors Found
 $6.8M Total Recovery
 $4.08M After Fees
 18 Month Cycle

6



Program Agenda
 Introduction

 Oracle GRC Advanced Control Solution
 Case Study
 Q&A

7



Advanced Controls
What is it?
 Layer of automated controls over ERP controls

 Continuously monitor key controls
 Detect and Report issues as they occur
 Prevent issues from occurring

 Quickly see high risk issues with exception based dashboards
 Address issues that affect the bottom line
 Reduces operational risk and process effectiveness

8



Standard + Advanced Controls

Standard
Controls
Track
Payments

User Roles

Hide
Displays of
Sensitive
Data

3-Way
Match
Approval
Hierarchies

Track
Discounts

Split
Purchase
Orders

Duplicate
Vendors
Transaction
Threshold
Amounts

Duplicate
Payments
Fuzzy
Logic,
‘similar
values’

9



Transaction
Pattern
Analysis

Advanced
Controls

Sentiment
Analysis

Finegrained
User
Access

Configuration
Snapshots &
Audit Trial

Top 10 Accounts Payable Issues
How does it affect the bottom line?
Top 10 Issues

Bottom Line Impact

Duplicate Invoices – 2 invoices

Overpayment to Supplier

Cash Leakage

Duplicate Invoices – 2 vehicle


Cash Leakage

Erroneous Charges to Invoice


Cash Leakage

Late Payment


Cash Leakage

Tax Errors

Inaccurate Tax

Cash Leakage

Duplicate Vendor in Vendor Master File

Inaccurate Vendor Master

Cash Leakage

Purchase order Related Issues

Financial Fraud and Misuse

Cash Leakage

Early Payment

Untimely Payment to Supplier

Negative Cash Flow

Missed Discounts

10

Business Risk

Untimely Payment to Supplier

Negative Cash Flow



Issue1: Duplicate Invoices – 2 Invoices

•Discrepant Invoices
•Late Payments
•Honest mistake/ Fraud
Advanced Control
Detective:
 Detect invoices with “Similar” invoice number, same amount to the one supplier
 Detect invoices made to the same suppliers but in different business unit
 Detect invoices made to different vendor with very similar names

Preventive:
• Put duplicate invoices on hold until proper investigation is complete

11



Issue2: Duplicate Payments – 2 Vehicle
• 2 Vehicles like Invoices and P-Card
• Paper Invoice and Electronic Process
• Expense Report and Petty Cash
• Multiple payment vehicle for a vendor
Advanced Control
Detective:

 Detect suppliers with multiple method of payment
 Detect payment made by procurement card and checks
Preventive:
• Put duplicate invoices on hold until proper investigation is complete
• Prevent Supplier from getting paid through paper invoice if he is setup for electronic payment

12



Issue3: Erroneous Charges to Invoice

• Who pays freight, insurance?
• Are invoices based on POs?
• Special deals
Advanced Control
Detective:
 Detect invoices where freight was charged when in PO it was supposed to be pre-paid by the
vendor
 Detect invoices where freight was charged and warehouse charged freight separately
 Detect invoices billed for quantities than what was actually shipped
Preventive:
• Put suspect invoices on hold until proper investigation is complete

13



Issue4: Late Payments

• “Never pay late fees”
• Open Vendor Credit
• Can result in Duplicate Payment
Advanced Control
Detective:
 Detect invoices that are approaching due date base on supplier/ PO payment term

 Identify users who have consistently not paid vendors on time
 Detect payments to vendors that are consistently late
Preventive:
• Send alerts on upcoming payments that are approaching due dates

14



Issue5: Tax Errors - Sales/ Use/ VAT
•Wrong Amounts
•Proper jurisdiction
•Proper documentation
•VAT Reclaim
Advanced Control
Detective:
 Detect sales tax invoices by vendors for non-taxable items
 Identifies use tax in error on non-taxable goods and services
 Identify all VAT invoices that are approaching due date of the calendar year
 Detect if sales tax goes over a threshold value
 Identify supplier invoices where VAT is charged based on supplier location vs where the service
is rendered

15



Issue6: Master Vendor Management
•Potential duplicate payments
•Segregation of Duties Concern
•Correspondence Issues
Advanced Control
Detective:
 Duplicate payment made to multiple entities of the same supplier
 Identify purchases made from unapproved vendors
 Identify suppliers with similar or different names but with same Tax ID Number or address
 Identify suppliers who exists in the “Do not do business with” suppliers
Preventive:
 Ensure Segregation of duties between supplier creation and other conflicting functions
 Detect suppliers with similar names at the time of supplier creation

16



Issue7: Purchase Order Problems
• Split Purchase Order
• Blanket Purchase Order
• After the Fact PO
Advanced Control
Detective:

 Detect Split PO to work around approval threshold
 Detect standard PO issued to a supplier where a blanket PO exists
Preventive:
 POs over a certain threshold require approvals
 Good receipts cannot take place without an approved PO
 Mandate PO number during invoice creation

17



Issue8: Missed Discounts
•Inefficient processing
•Best financial return for any company
•Track discount lost and why
•Fix root causes whenever possible
Advanced Control
Detective:
 Identifies special rebate from the PO contract that the invoice failed to mention
 Track invoices that missed discount date by a little margin
Preventive:
• Send alerts on upcoming discounts available for payments above a threshold

18



Issue9: Early Payment
• Negative cash flow
• Fraud
• Analyze early payments
Advanced Control
Detective:
 Detect payments made earlier than supplier payment term
 Alerts a user if payment term setup is changed
Preventive:
• Set up an approval process if payment term is changed

• Prevent payment term to be changed
• Ensures segregation of duties between invoice creation and supplier creation

19



Issue10: Travel & Entertainment
• Employee misuse
• Constant leakage to the bottom line
• Make manager responsible
• Part of annual review
Advanced Control
Detective:
 Identify suspicious activity between coworkers to highlight the pattern of interrelationship in the
expense reports
 Detect expenses claimed in an expense report instead of booking through approved channels

 Detect expense splitting
Preventive:
• Deny expenses through unapproved channels unless approved by senior management

20



Program Agenda
 Introduction

 Oracle GRC Advanced Controls Solution
 Case Study
 Q&A

21



GRC Advanced Controls
One Enterprise Foundation

 Risk & Controls Repository
 Assess and Certify
 Detect Policy Violations

Dashboards, Reports and Alerts
Worklists

Notifications

Email

Search

Perspectives

Risk, Controls & Compliance Management
Documentation

Reviews

Assessments

Surveys

Remediation

Continuous Controls & Risk Monitoring
Access

Setups

Data Connectors

Master Data

Transactions

User Authored Controls

Audit Tests

Fraud & Error Patterns

Custom or Legacy
Applications

22



Web Services & APIs

Role Based Access Security

Enterprise Risk & Controls Foundation

 All Users & Applications
 100% of Transactions
 All Processes
̶ Procure to Pay

̶ Order to Cash
̶ Financial Reporting
̶ User Access

 Manage by Exception
 Optimize Processes

Oracle Advance Control Process Overview
Optimization

Cash Flow

Prevent Leakage

Business Risks

Controls Objectives

Continuous Monitors

Unapproved or
Illegal Suppliers

Capture all
Discounts

Duplicate Invoice
Payments

Supplier and Invoices
Created by Same User

Delayed Supplier
payments

Accurate Supplier
Information

Discounts Lost due to
Delays in Payment

Multiple Suppliers with
the similar email domain

Incorrect Vendor
Payment

Valid Invoice
Payments

Erroneous Payment

Purchase Orders
created after Invoice

Incident !
Incident !
Incident !

Valid Purchase
Orders

Duplicate vendor in
vendor master file

Split Purchase Order

Incident !
Investigate
Close

ERP Transaction Payment Hold

23



Exception Based Dashboard

24



Continuous Monitor – Duplicate Invoices

25



Control Definition

26



Incident Management

27



Incident Management

28



Preventive Measure

29



Preventive Measure

• Enforce controls & policy within the ERP systems

30



Advanced Controls
Enables you to:
Increase Process Effectiveness
Improve Bottom-Line

Reduce Operational Risk

31



…by
Continuously
Monitoring
Your
ERP
Applications

Advanced Controls
Detect unwanted transactions

Improve Bottom Line
Detect settings that cause loss
Make Processes More Effective, Efficient
Detect problematic exceptions
Reduce Operational Risk
Automate policy management

32



Program Agenda
 Introduction

 Oracle GRC Advanced Control Solution
 Case Study
 Q&A

33



Case Study

34



Why Oracle GRC Advanced Control?
•Compliance Requirement from internal/external audits
•Global country regulations
•Acquisitions and new legal entities
•Solution Compliance Variation
•Capability to monitor 100% of data
•Scalability for Oracle and non Oracle integration

35



Use Cases - Scope
Duplicate payments by
invoice

Maverick buying
PO date should be
prior to the invoice
date

$

Identify duplicate invoices by
similar invoice and by vendor

PO related problems

Duplicate invoice

Accounts
Payable
(Phase I)
Duplicate vendors

Duplicate payments by
vendor

Identify creation of
duplicate vendor sites

Identify duplicate invoice
processing by vendor

Duplicate vendor in
vendor master file

36


Duplicate invoice


Use Cases – Scope
Identifying erroneous
high value payments
Payments more than 30%
increase of the last rolling 6
months payment to the vendor

VAT rate
Identify different VAT rates
applied by the same vendor, for
same goods/services, for same
bill to entity

$
Accounts
Payable
(Phase II)

Erroneous payment

Tax errors

Withholding Tax (APAC)
Identify the suppliers/ invoices
where the incorrect rate of
WHT was applied
Tax errors

37



Use Cases - Scope
File attachment on Expense Reports (ER)
Identify ERs with supporting documents in unacceptable formats (like editable attachments like .txt)
Noncompliant expenses

Forensic repeat offenders
Identify expenses claimed in
iExpenses instead of booking
through approved channels

Expense splitting
Identify expenses that were split
to avoid policy violation

Inappropriate T&E claim

iExpense
(Phase II)

Collusion – analysis of
attendees

$

Analysis of attendees to highlight the
pattern of interrelationship with coworkers related to suspicious ER activity

Identify the expenses claimed using unapproved
channels, and by wrong categorization to avoid
activating the report for audit

Amex/cash surfing
Verify if same expense has
been claimed both as Amex
and cash
Duplicate expenses

Key word search in category

38



Phase1 Facts
Date Analyzed
Graph Initial Build

130M records processed

Graph
Incremental Build

1.3M records processed

No. of Entities

Approximately 150+

No. of Use Cases
39

For One (1) Year

Four use cases in Accounts Payables



Lessons Learned
Hardware
Configuration

ETL Performance
Assessment

Model & Control
Analysis Assessment

• TCG analyzes millions of

• Perform multiple
iterations of graph build.
Monitor sys resources

• Optimize the design of
models

transactions so it needs
enough resources (disk
space and memory)
• Follow Oracle

recommended h/w and
s/w and make
adjustments based on
the volume of
transactions

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• Analyze transaction
volume of each business
object used in models
• Understand the ETL
design and Data
Extraction criterion


• Replicate read-only
schema instead of using
apps schema of EBS
• Implement control data
level security (by region)
so incidents can only be
viewed by the right user
for that region


Fit/Gap Analysis

Oracle Support

• Verify the availability of
business objects for the
use cases

• Early engagement with
Oracle

• Validate the model
results first before
running the controls
• If you don’t need to
secure your incidents,
then do not use
perspective for security

• Tight collaboration and
partnership with Oracle

Thank You! Join us on LinkedIn to view
Summary and Q&A
webinar and discussion

41



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