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Accounts Payable & Receivable › Payment Runs

What controls should surround a payment run to prevent errors and fraud?

Intermediate

Answer

Controls include segregation of duties (preparer vs approver/releaser), dual authorization of the payment file, review of a pre-run proposal/exception report, positive pay with the bank, limits and duplicate checks, secure transmission of the bank file, and reconciliation of the run total to postings. These prevent unauthorized, duplicate, or altered payments.
Real-world example The payment file requires two authorizers to release, and positive pay lets the bank reject any check not on the issued list.

Common follow-ups: What is positive pay? | Why review the payment proposal before release?