Success Stories

IOFM-Trained AP Hero Prevented Her Organization from Being Bilked for $120,000

An Accounts Payable manager in Texas recently reported an incident in which she was able to foil a fraudster who had billed her organization for $120,000. Fortunately for her company, the AP professional had recently attended IOFM’s 1099 and 1042 conference sessions and webinars. As a result, she was well-versed on internal controls and how to properly set up and vet foreign vendors.

Strong internal controls and proper training are proven deterrents to fraud. In recent reported cases, Accounts Payable professionals have been able to keep potential malicious intruders at bay, saving their organizations thousands of dollars.

Fraudster Requests a Wire Payment

The Accounts Payable Manager received an email, supposedly from the Executive Assistant/Manager Special Projects.

The email included an attached invoice, asking AP to pay a whopping $120,000 balance immediately and to email a wire confirmation when done. The invoice looked legitimate enough, but the urgency of the request and the method of payment gave the AP professional pause.

Something's Not Right Here!

In addition to asking the AP manager to pay a vendor that had not even been set up in the vendor master file, she was being asked to forego the organization’s established policies and procedures. According to these policies, a W-8BEN-E was required to validate and pay a foreign vendor.

Suspecting fraud, the AP manager responded to the requester asking that a W-8BEN-E be filled out so that the foreign vendor could properly be set up in the system. Immediately, an email response came back. The suspected “vendor” had attached a W-8BEN—the incorrect form.

From her 1099 and 1042 training, she was well-aware of the difference between a W-8BEN and a W-8BEN-E. She took an additional step to test her fraud theory and sent two test questions to the bogus in-house payment requester, saying:

“I sent you the correct form for the company (the W-8BEN-E form). The form that the vendor sent is for an individual. Please have the company fill out the correct form. Also, will you be generating a PO in AX when the system gets back up?”

A Bona Fide Scam

The AP manager refused to issue the wire payment without the W8BEN-E or until the matter was investigated.

As suspected, the email was not generated from within the organization. A fraudster had hacked the company’s email system and obtained names of company employees. Using this information, the fraudster requested the wire payment be sent to a fictional company.

Advice for Other AP Professionals

“Accounts Payable departments should never waver or cut corners when initiating payments to vendors, no matter how urgent the request. Follow the rules in place to avoid fraud within your organization.”

Attend the IOFM Spring Conference & Expo to benefit from sessions, workshops, and live certifications. Each conference component is designed to help finance professionals like you step into the role of AP super-hero, identifying fraud risk and saving your organization time and money.

Read the full article here.

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