The audit of claims or vouchers (the terms are used interchangeably in this publication) is a classic internal control activity. It is also a control activity that is not always conducted effectively. In order to ensure that tax dollars are spent efficiently, it is essential that a thorough, deliberate and independent audit of claims be conducted before payments are authorized.
With constant pressure to do more with less, localities cannot afford to overpay vendors, lose discounts or pay for goods and services not received. An effective audit of claims is often the last line of defense for preventing unauthorized, improper or fraudulent claims from being paid. In short, the audit of claims is a highly important internal control, but only if properly and effectively exercised. Some examples of our audit findings in this area include:1
- Claims were paid prior to being audited and approved.
- Signed checks were printed before claims were audited and approved.
- Warrants were not signed indicating audit and approval of claims.
- Claims were approved for payment despite not being sufficiently supported.
- Not all individual claims were being reviewed deliberatively and thoroughly during audit.
- Inappropriate payments were made because claims were not reviewed or audited.
All references in this guide to “employees” should be interpreted to mean both officers (elected and appointed) and employees of local governments and school districts.
1 Office of the New York State Comptroller audit reports are available at www.osc.state.ny.us/local-government/audits.