AP Fraud Red Flags: Fake Vendors, Duplicate Invoices and Bank Changes
AP fraud often looks like normal urgency: new vendor, changed bank account, duplicate invoice or split payment under approval limit.
For broader context, see the GST Law & Practice Hub.
Why this can go viral
Detailed analysis
AP controls should monitor duplicate invoice numbers, suspicious bank changes, round amounts, split invoices, same-address vendors, emergency approvals and maker-checker gaps.
Practical example
Vendor emails new bank details just before payment. Finance calls verified contact, checks old vendor master, requires independent approval and blocks payment until bank change evidence is confirmed.
Evidence and control checklist
| Area | What to check | Evidence to save |
|---|---|---|
| Definition and owner | Define AP fraud controls, owner, source system and review frequency. | Metric dictionary, owner matrix and version log. |
| Source data | Books, bank, CRM, payroll, billing, contracts or statutory filings used. | Source extracts and reconciliation sheet. |
| Computation logic | Formula, assumptions, exclusions and period consistency. | Working paper and CFO sign-off. |
| Decision impact | How the output affects pricing, hiring, spend, funding or compliance. | Management note and action tracker. |
| Diligence evidence | Whether an investor/auditor can verify the number independently. | Indexed folder with contracts, reports and approvals. |
For the connected rule, example or next step, see GST Data Analytics Red Flags: What Triggers Notices.
Common mistakes
- Changing vendor bank from email only.
- No duplicate invoice check.
- Splitting invoices below approval threshold.
- No maker-checker on vendor master.
- Urgent payments bypassing controls.
Official reference framework
Based only on official India Code, Startup India, RBI, Income Tax Department, MCA and ICAI source pages listed below. Check latest law, forms, accounting standards and professional advice before execution.
Official sources used
This article is source-limited to official India Code, Startup India, RBI, Income Tax Department, MCA and ICAI material. Source validation date: 17 June 2026. Verify final positions with latest law, accounting standards, tax rules and professional advice before execution.
- India Code: Companies Act, 2013 Section 128 - Books of account
- ICAI: Engagement and Quality Control Standards - Complete Text
- India Code: Companies Act, 2013 official PDF
For the connected rule, example or next step, see SaaS Export Invoices: FEMA, GST and Bank Realisation Controls.
FAQs
Because it converts founder intuition into a number that finance, investors and boards can verify.
Using a metric or number without a defined formula, source data and reviewer sign-off.
Monthly for operating metrics; weekly for cash/runway-sensitive items.
Finance/controller should own the evidence and computation; business teams should own the operating input.
No metric without source data, no forecast without assumptions, and no board number without reconciliation.
Source and review trail
Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.
- Primary category
- GST & Indirect Tax
- Official starting point
- www.gst.gov.in
Page source links
For the connected rule, example or next step, see GST Refund for Inverted Duty Structure: Eligibility, Formula and Red Flags.