Business and government entities use Recovery Auditing to identify deviations in processes and variances from contractual terms.
In The Past
For decades, accounting and other consulting/services firms have dropped into organizations for multi-month to multi-year engagements whereby they methodically comb through the organization’s accounting data and records to find mistakes. Then, once these overpaid monies were recovered, the Recovery Audit services firm pocketed about one-third (33%) of the total in contingency fees. So, for example, if a consulting firm recovered $1 million in errors, the organization got $667,000, and the Recovery Audit consultancy reaped $333,000. Of course, this has been highly profitable work for Recovery Audit consultancies.
The fact is that US companies have an average payables error rate (primarily overpayments) of between .1% and .4%. The following are risk factors that help determine an organizations level of recovery...
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System Conversions or Upgrades
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Mergers and Acquisitions
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Inadequate Staffing levels
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Decentralized Operations
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Use of Temporary Employees
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Internal Control Weaknesses
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High Turnover
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Inadequate Master File Maintenance
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Lack of System Integration
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Rapid Growth
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Homegrown or Customized Systems
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Lack of Standardized Procedures
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Now organizations can use CashFlow Guardian to perform the analysis and recovery work that Recovery Audit consultancies have been conducting for years. The beauty of CashFlow Guardian is that it allows organizations to see what they need to fix or change so that problems do not reoccur. CashFlow Guardian ranks problems by severity, and allows for sorting and filtering so that the cause can be diagnosed. And CashFlow Guardian can even run tests relating to “Audit Controls,” which are ever more important in this era of Sarbanes-Oxley. For more information Contact Us.