Audit Methodology
What’s the best approach? RA matrix takes the time to thoroughly understand each client’s needs and objectives before formulating a final approach. An understanding of the data available, the scope, sensitive areas, and relationships are all taken into consideration as a custom methodology is developed. A timeline and resources are then assembled to perform the recovery audit. This methodology is based on years of conducting customized audits for hundreds of clients in diverse industries.
Our reviewers possess an in-depth understanding of IT and financial analysis and have worked with management at all levels.
RA matrix’s methodical and well-planned project approach is as follows:
PLAN – ANALYZE - AUDIT– RECOVER – RECOMMEND
PLAN – Define Audit Scope, Obtain Data, Preplan
Once the terms and scope of the engagement have been agreed upon we proceed to obtain the data files.
RA matrix’s flexible and non-intrusive data acquisition methods enable an audit of virtually any data type on any system or combination of systems including proprietary and extensively customized financial, ERP, and payment systems.
We work hand in hand with your Client’s IT department by providing them functional specifications that includes relevant field names and conversion logic, which minimizes the amount of time they spend on the project. Any data acquisition is done as seamlessly as possible, with the goal of minimal reliance on client IT resources. |
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ANALYZE
RA matrix analyzes all available sources of data, in each and every relevant system required.
Once the data is consolidated, it can be mined by reviewers for payment errors.
Our reviewers examine 100% of the data files provided, using specialized data mining software to identify opportunities and trends. We test all of the fields in the data files. We audit our Client’s systems and processes to include, but not be limited to, identifying overpayments and/or duplicate payments made by the Client when paying supplier invoices for inventory, supplies, services, capital projects, and other expenses.
AUDIT
Based on our introductory meeting and initial orientation we develop a formal work plan, and specifically tailor our work program to conform to our respective Client’s operating environment. While on-site, our reviewers may desire access to our Client’s accounting system (on a read only basis), access to the files if invoices are paper, or access to the imaging system if they are imaged. Our reviewers know the importance of balancing important vendor, supplier, and provider relationships as well as minimizing any staff interruption.
Ra matrix’s primary objective is to recover the most money possible for its clients.
The combination of our process, expertise and persistence allows our reviewers to
produce outstanding results and hence, client satisfaction.
RECOVER
The recovery stage begins with the communication of our findings to you for approval.
We prepare a complete documentation package for each audit finding to facilitate a smooth, uncontested process and prompt recovery from your vendors and taxing authorities.
The collection process is initiated by submitting the claim to the vendor or provider along with a letter of explanation and backup documentation (invoices, purchase orders, cancelled checks, vendor correspondence, etc.). Money is typically recovered in the form of a cheque or credit memo. Recovery may take several forms, including cash refunds, reductions of future liabilities, or vendor credits.
As your liaison, we ensure that communication with your vendors is conducted on a professional level and in a manner that will not jeopardize your strategic vendor relationships.
For taxing authorities the client generally controls the claim process by deducting from the next remittance or claiming a refund. RA matrix will if necessary make direct representations to the taxing authority.
RECOMMEND
• Audit Status Reports - Status reports are provided at the end of each week during the course of an audit to keep the client informed of progress at all times. The reports provide information on recovery sources and error causes as they are revealed, instead of at the end of an audit. This can allow the client to implement corrections as soon as possible.
• Management Reporting - The management reports contain a summation of audit findings. In addition, it contains actionable recommendations to reduce or eliminate future errors. Trends and observations discovered during the audit are presented here, including:
- Detailed and summarized analysis of claims and payments
- Internal control issues, concerns, and root causes
- Practical recommendations for improving internal controls & procedures
- Identifying opportunities for additional audit coverage
Better technology enables experienced people to recover the most money possible.
RA matrix recommends that firms regularly evaluate their recovery audit provider. To do so, it may be appropriate to adopt an alternating approach, whereby a new provider is introduced. This new provider could be engaged to do a second pass on a period covered by the previous provider along with a first pass on a subsequent period. The client can then offer the same opportunity to its previous provider for the next review cycle, and evaluate the results of the two review cycles. As technology and practices change, audit firms must also change to provide the best services to their clients.
Recovery auditing is a financial best practice recognized by leading companies worldwide as a method for reducing erroneous payments, improving processes, and enhancing performance. Even if an average of 99.9% of all transactions and payments are processed correctly, the small amount of error can quickly add up to a large amount of dollar recoveries that would otherwise be lost.
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