It is important to periodically analyze accounts payable data to identify red flags that could indicate potential fraud. Remember that red flags are warnings to the business that something is out of the normal range. Once data analytics are used to identify red flags, someone must follow up on these records by investigating source documents. A red flag is only an indicator of possible fraud and does not guarantee fraud is occurring.

$$The payments processes are a high risk for fraud because they involve the movement of cash from the company to a vendor. This makes accounts payable data one of the most popular areas for performing fraud data analytics.

$$To identify accounts payable transactions with fraud red flags, consider the following questions: Is there an employee receiving vendor kickbacks? Are there payments made on invoices that have no purchase orders approved? Is there a vendor that invoices Julia's Cookies with sequential invoice numbers? Are there any employee addresses that match a vendor address?