University of Kentucky Internal Audit
UKIA MISSION STATEMENT
To support UK in its pursuit of excellence by providing advisory and assurance guidance to champion reasonable assurance regarding the achievement of management objectives.
January Tip of the Month
The "Tip of the Month" is designed to share UK Internal Audit’s (UKIA) audit and advisory experiences with the UK community. The UKIA Tip of the Month for January 2015 pertains to vendors.
The purpose of this month's tip is to communicate some common practices and provide a few suggestions related to appropriate vendor procedures. This discussion seems befitting after the busy holiday shopping season where online and storefront vendors were patronized by millions whose spending totaled approximately $35 billion. Good vendor management is characterized by critical elements such as proper vendor selection and payment protocols. Reliable vendor selection is supported by the use of University-contracted vendors as the first source for purchases. These contracted vendors are validated through a competitive process or other University-negotiated agreements establishing a business relationship. Please note that completion and acceptance of a UK Vendor Application does not establish or sanction a business relationship; these relationships are only sanctioned by UK approving officials. UKIA has four tips to assist units/departments with managing vendors.
The Vendor Master File is the central reference point for the Purchasing Division and other areas throughout the University for vendor and payment validation. Validating vendor appropriateness requires a number of checks and balances. None of these can replace monitoring at the Unit/Departmental level where vendors are many times initially selected. It is the unit's responsibility to understand vendor policies and procedures at UK. Never assume it is someone else's job to evaluate vendors. Deceptive practices relating to vendors include:
- Shell Companies - Usually exist in name only to facilitate improper activities. These companies normally provide no goods or services.
- Billing Schemes - Fabricated or altered invoices for the benefit of the "Vendor" or perpetrator.
- Purchasing Schemes - A plot or plan to deceive an organization for an employee's personal gain through vendor overbilling or employee payments.
This month’s tip is stated as COPE, in that units should "COPE" with vendors to confirm appropriateness.