AP Invoice Fraud Prevention: Red Flags and Effective Controls (Course Id 2687)

• Who is this course for?
  This course is designed for AP or procurement specialists, accounting managers, controllers, auditors, finance professionals, and anyone needing Continuing Professional Education (CPE).

• What is this course about or what problem does this course solve?
  The course addresses the widespread issue of accounts payable (AP) invoice fraud by equipping professionals with knowledge and tools to detect, prevent, and combat fraudulent billing schemes and vendor manipulation.

• How can the knowledge from this course be used?
  Learners can apply the course's strategies and techniques to identify red flags, implement preventive and detective controls, and utilize technology to minimize the risk of AP fraud in their organizations.

• Why is this course important to a CPA, Accountant, or IRS Enrolled Agent?
  It is vital because AP fraud can cause significant financial losses, and professionals responsible for financial oversight must be equipped to safeguard assets through robust fraud prevention and detection practices.

• When is this course relevant or timely?
  Released in 2025, the course is timely in addressing ongoing global challenges in occupational fraud, particularly with increased reliance on digital and automated financial systems.

• How is a course like this consumed or used?
  Delivered as a NASBA QAS Self Study text course, it includes real-world examples, downloadable red-flag reference cards, and assessments to reinforce learning, requiring a 70% passing score on the final exam.

AP invoice or billing fraud is among the most common and expensive types of occupational fraud worldwide. According to the Association of Certified Fraud Examiners (ACFE), organizations lose approximately 5% of their revenue to fraud annually, with billing schemes accounting for roughly 22% of these cases globally! AP fraud schemes typically last a long time—often 18 months before detection—and over half of them cause losses exceeding $100,000.

This comprehensive course equips finance professionals with essential skills to detect, prevent, and combat accounts payable and vendor manipulation fraud. You'll master the critical aspects of AP fraud prevention through practical, real-world scenarios that blend theoretical knowledge with actionable strategies.

Through this focused training program, you'll learn to:

• Identify common AP fraud schemes: Discover the various deceptive methods fraudsters use to exploit accounts payable systems, including fictitious invoices, shell vendors, and payment diversions
• Recognize red flags and warning signs: Learn to spot subtle indicators that may signal fraudulent invoice or vendor activity
• Implement effective preventive controls: Explore key strategies to establish robust safeguards that prevent AP fraud before it occurs
• Deploy detective controls: Gain insights into monitoring techniques that help identify suspicious activities early
• Leverage technology solutions: Understand how to use RPA (Robotic Process Automation) and AI (Artificial Intelligence) to enhance your fraud prevention capabilities

The course provides downloadable AP Fraud and Vendor Manipulation Red-Flag Cards that serve as quick reference guides for identifying the most common fraud indicators.

Whether you're an AP or procurement specialist, accounting manager, controller, auditor, or finance professional, this course will sharpen your "fraud lens" and equip you with practical tools to protect your organization from costly AP fraud schemes and vendor manipulation.

NASBA QAS - Text - NASBA Registry - 2687

Course Learning Objectives

1. Identify common payroll fraud schemes: Recognize various deceptive methods fraudsters use to manipulate payroll systems for personal gain.
2. Detect red flags: Spot warning signs and indicators that may signal fraudulent payroll activity is occurring.
3. Analyze fraud scenarios: Apply knowledge to evaluate situations where multiple risk factors suggest potential fraud.
4. Implement preventive controls: Establish proactive measures designed to stop fraud before it occurs.
5. Deploy detective controls: Utilize monitoring techniques that help identify suspicious activities after they've occurred.
6. Leverage technology: Integrate manual controls with RPA and AI to enhance fraud prevention.

Section 1
Payroll Fraud Schemes & Red Flags

1. Identify common payroll fraud schemes: Recognize various deceptive methods fraudsters use to manipulate payroll systems for personal gain.
2. Detect red flags: Spot warning signs and indicators that may signal fraudulent payroll activity is occurring.
3. Analyze fraud scenarios: Apply knowledge to evaluate situations where multiple risk factors suggest potential fraud.

Section 2
Preventive, Detective, Automated & AI Controls

1. Implement preventive controls: Establish proactive measures designed to stop fraud before it occurs.
2. Deploy detective controls: Utilize monitoring techniques that help identify suspicious activities after they've occurred.
3. Leverage technology: Integrate manual controls with RPA and AI to enhance fraud prevention.

Section 1. AP Invoice Fraud: Overview, Schemes, Red Flags

Learning Objectives for Section 1

1.1 Course Introduction

1.2 Fraud Statistics and Ethical Relevance

1.3 Common AP Invoice and Vendor Fraud Schemes

1. Fictitious or False Invoices (Fake Billing)

2. Shell Vendor Companies

3. Duplicate Invoices and Payments

4. Personal Purchases via Company Vendors

5. Vendor–Employee Collusion (Kickbacks & Overbilling)

6. Vendor Master File Manipulation

7. Payment Diversion & Check Tampering

8. Business Email Compromise (BEC) & Phishing Scams

Realistic Case Scenario – Vendor Collusion in AP

1.4 Common Red Flags in AP Invoices & Payments

1. Unexplained Spikes in Vendor Payments

2. Extraordinarily Large Single Payments

3. Suspicious Payment Timing

4. Invoices Just Below Approval Thresholds

5. Duplicate Invoices or Payments

6. Repetitive or Round-Number Invoice Amounts

7. Vendor Identity Anomalies (Duplicate IDs or Addresses)

8. Frequent Vendor Master Changes

9. One-Time Vendors with Big Payouts

10. Employee Behavioral Red Flags

Realistic Case Scenario – Red Flags

Multiple Red Flags

Section 1 Review Questions

Section 2. Preventive, Detective, Automated & AI Controls

Learning Objectives for Section 2

Introduction to AP Controls

2.1 Key Preventive Controls in AP & Vendor Management

1. Segregation of Duties (SoD)

2. Purchase Orders and Three-Way Match

3. Approval Workflows and Authorization Limits

4. Vendor Due Diligence (Know Your Supplier)

5. Bank Account Change Verification (“Callback” Controls)

6. Access Controls & Physical Safeguards

7. Vendor Rotation and Competitive Bidding

8. Mandatory Vacations & Job Rotation

How Preventive Controls Could Have Stopped Jonah

2.2 Detective Controls and Oversight

1. Frequent Reconciliations

2. Analytics & Exception Reporting

3. Vendor Confirmations and Reconciliations

4. Self-Testing of Internal Controls

5. Whistleblower Hotlines and Open Communication

6. Management Oversight and Reviews

7. Internal Audits and Surprise Inspections

How Detective Controls Could Have Caught Jonah

2.3 Leveraging Technology in AP Fraud Defense

Automated Invoice Matching Systems

Duplicate Payment and Data Redundancy Technology

Vendor Master File Protection

Bank Detail Validation Technologies

E-Invoicing: The Ultimate Control

Advanced Anti-Fraud Synergy of AI and RPA

The Integrated Approach: RPA + AI

Technology Needs Oversight

Conclusion on Controls

2.4 Key Takeaways and Conclusion

AP Processes: High-Value Targets

A Multi-Layered Defense Strategy

The Critical Role of Culture

Your Next Action Steps

Section 2 Review Questions

Thank You

Glossary of Key Terms