Purchasing, AP, & Claims DURING COVID-19

26 May 2020

As COVID-19 continues to affect life as we know it, school districts and businesses are forced to adapt to the new norm: less paper and more electronic documents. In addition, internal processes have had to change to accommodate fewer employees working in the office, spaces have been redesigned so staff can work while adhering to social distancing guidelines, and management has been challenged with figuring out how staff can work remotely. Claims auditing generally requires interfacing with business office staff in-person along with the review of a lot of paper-based documents, those being printed purchase orders, invoices, packing slips, request forms, and of course, checks. Once schools and businesses we mandated to close in mid-March, performing the claims audit review as we normally did was not a viable option. Knowing how important accounts payable payments are to a school district, we worked with districts to provide claims auditing services and ensure payments were reviewed and approved before being released. Here are some ways we have been able to safely, effectively, and efficiently review payments despite the pandemic:

In-District Claiming:

A good practice (even before COVID-19) is to let the claims auditor know in advance the check count. This allows for the proper time to be allotted to review the claims and the option to provide extra resources if need be. This has become very important information as we all have to adhere to proper social distancing. Most, if not all, districts are seeing a decrease in the quantity of checks being processed and the number of employees working at any one time due to the pandemic. This helps with social distancing, but for the safety of employees and auditors, districts should have an isolated room available for the auditor(s). The room should be sanitized before and after the audit. All staff and auditors should maintain good hygiene throughout the audit, avoid using district facilities and equipment when possible, and adhere to appropriate social distancing guidelines to further reduce the risk of exposure.

Pick-Up Claiming:

Another option is to allow your claims auditors to pick up the claim packets from the district, including all backup and warrant copies, to be reviewed at another location, such as the claims auditor’s office or the claims auditor’s home. Auditing checks in the office/home provides another way to maintain social distancing, but proper planning is required. It is especially important for each packet to be complete with all the backup, and to ensure someone will be available to the auditors by email or phone should any questions or concerns arise. Also important is the arrangement of the pick-up and drop-off times.

Drop-Off Claiming:

For some districts, it may be convenient for someone in the district to drop off the checks and claims packets to the claims auditor’s business location. Similar to pick-up claiming, it is important that all the support is attached to each claims packet, and that someone is available should any questions arise.

Online Claiming:

Auditing online could be the most appropriate and efficient way to reduce exposure to COVID-19. District staff will still need to be available to address any auditor concerns. However, this method is time-consuming as the district would need to scan every claim being audited along with any supporting documents. Further, that could make this method the most effective for small check runs and emergency claims.

Whenever the claims audit is performed outside the district, the auditor will need some method of obtaining information or additional support when necessary. While having an open line of communication between the auditor and the district could be sufficient, it would be optimal if districts could provide the auditor with remote access to the district’s system. Another consideration would be to provide district laptops for auditors to view documentation scanned and uploaded onto the system, making online/remote claims auditing seamless. We can hear the rumbling: schools are still quite attached to paper processes, but it is quickly becoming obvious that we need to shed the paper and embrace digitized documentation. After all, many schools already accept emailed invoices as the vendors have stopped mailing paper invoices in an effort to “go green.”

There are many advantages to going paperless, especially when making vendor payments requires working together in separate locations. Your auditors would be able to perform their audit remotely and within your application, rather than going through the physical, sometimes novel-like packets. By now, we know a bunch of questions have begun to brew- What about the internal control procedures that are being performed by claims auditors that require examining the paper purchase order against the paper invoice? How can we ensure the electronic documents are valid? How do we do this? What system do we have to implement? Well, now is a great time to start making better use of the technology you have. The flooding from Superstorm Sandy wiped out paper files at some districts and came as a loud wake-up call to go paperless. That started the process of scanning in documents and uploading them into the financial software application used by the district. Both WinCap and nVision have this capability. Some schools are also looking at software applications like KISSFLOW to replace the paper-based forms and keep the records within its system. These are both good places to start your digital adventure, but don’t forget to discuss how to set up these systems while ensuring controls are adhered to.

Regardless of the method your district is using for claims auditing during the pandemic, it may be time to consider a more automated system for purchasing and payables in the long term. The pandemic is forcing this discussion across all industries and the need to work remotely is clear. Even without the need for social distancing, creating a more technology-centered environment can make purchasing and other processes more efficient and effective. Let’s work together to be better prepared for the future.

Tom Weyer, CPA
Staff Accountant
Garrett Majka
Staff Accountant
Lenny Giambalvo
Claims Auditor

This article was also featured in our newsletter Lesson Plan Vol. 22