Recovery Auditing
Recovery Auditing is the systematic process of reviewing disbursement transactions and the related supporting data to identify and recover various forms of over payments and under-deductions to suppliers. In other words it's the recovery of lost money.
History
Recovery auditing was at first primarily for retail based companies.It was developed in the 1970s as a result of Companies losing millions of dollars annually because of unpaid invoices, duplicate payments, discounts and allowances not received and general over payments. Before recovery auditing, this "lost money" was too difficult to identify due to the millions and trillions of transactions processed every year. It wasn't until companies began investigating deeper into their accounting that they found errors in their favor. Their discovery was appalling, finding millions upon millions of lost dollars. Thus, the recovery auditing industry was born. Two of the largest contributions made by this industry was the Improper Payments Act of 2002 (IPIA) spearheaded by Paul Dinkins and the Medicare Modernization Act of 2003.
Divisions
Grocery
Medicare
How The Industry Has Changed
Traditional recovery auditing required an army of auditors to sift through all the paper work to find overpayment errors. As time progressed, so did technology, moving the data to large data centers to be mined for these payment errors. As it stands with most recovery audit services throughout the world, it can take up to 16 months to retrieve money found from the errors which are in the client's favor. Product vendors have become weary of old claims and will soon refuse any claims that are older within a certain time frame agreeable to the vendor. Because of this, some companies are adapting by auditing quarterly or even monthly which in turn improves vendor- client relations. This new form of recovery auditing is called Near Real-Time Detection and Correction.
Types of Recovery Audit Services
Accounts Payable
Contract compliance issues
Currency mistakes
Duplicate payments
Licensing compliance
Paid credit memos
Fictitious vendors
Improperly applied taxes
Missed cash discounts
Overpayments
Pricing errors
Risk Management
Shipping errors
Unclaimed checks