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By Scott Prentice, CPA, CFE Audit Manager

Each day, managers review and approve several invoices, contractor statements, time sheets, expense reimbursements, purchasing card details, and other documents that cause cash to be disbursed. All too often, that approval becomes a "rubber stamp" with little active thought about what the approval step really means. "Signatures without thought" make it easy for those who are trying to fool us. Approval of transactions that turn out to be fraudulent can be embarrassing at best and career limiting at worst.

Managers are encouraged to answer these basic questions before approving invoices and other payment documents. All address the general question of "How do I know?"

  1. How well do I know this vendor or contractor? Do I have first-hand knowledge that they even exist?
  2. Do I know that they actually provided the goods or services identified in the invoice or other billing statement?
  3. Do I know that they are using the correct amounts for price (including unit prices used), sales tax, freight, and other variables that make up the amount invoiced?
  4. On what basis do I know that the prices are reasonable in the first place? What standard have I used in determining that the price charged is fair?
  5. How do I know that the quantities make sense? On what basis have we agreed to purchase the stated quantities?
  6. How do I know that the invoice and other documents are mathematically correct?
  7. Do I know that this invoice has not already been paid?

You should ask yourself similar questions before putting your signature or approval on any transaction. An additional question you should ask yourself is How do I know that the accounting for this transaction is correct?


If you have any questions regarding the article above or any other issue affecting your not-for-profit organization please contact your Blue & Co. advisor or e-mail us at or call us at 800-717-BLUE


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CIRCULAR 230 DISCLOSURE: To ensure compliance with recently-enacted U.S. Treasury Department Regulations, we are now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including any attachments, is not intended or written by us to be used, and cannot be used, by anyone for the purpose of avoiding federal tax penalties that may be imposed by the federal government or for promoting, marketing or recommending to another party any tax-related matters addressed herein.


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