Duplicate Payments

Applicable or Related Code Sections

• ORC 113.08 – Payment and procedures for payment to the treasurer

• ORC 125.01(B) - Definition of invoice

• ORC 126.07 – Certification of balance statement in all contracts

• ORC 126.08 – Director of budget and management – powers and duties

• ORC 126.21(A)(8) – Accounting duties of director of budget and management

• ORC 126.22 – Director - accounting powers

• ORC 126.30 – Interest on late payments for goods and services

• ORC 131.01 – Revenues and funds definitions

• ORC 131.02 – Collecting amounts due to the state

• ORC 131.34 – Transfers between funds or between state agencies

• OAC 113-1-02 – Payments into the state treasury

PURPOSE

Duplicate payments are generally caused by weaknesses in the accounts payable process when prior payment(s) is not detected. Therefore, the purpose of this policy is to define the roles and responsibilities to prevent and detect improper duplicate payments made by an agency to a supplier. This policy also establishes the process an agency should follow to recover money paid out due to an improper duplicate payment.

SCOPE

This policy applies to all state agencies, boards, and commissions for expenditures made from funds within the state treasury.

AUTHORITY

• ORC 126.07
• ORC 126.08
• ORC 126.21(A)(8)
• ORC 126.22
• ORC 126.30

DEFINITIONS

• “Duplicate Payment”: An additional payment made to a supplier that has already been paid for the same purpose.

• “State Agency”: Includes every organized body, office (including boards and commissions), or Agency established by the laws of the State for the exercise of any function for state government.

• “Supplier”: Any person, partnership, corporation, association, organization, state agency, or other party who sells, leases, or otherwise provides equipment, materials, goods, supplies, or services to a state agency pursuant to a written or oral contract between the vendor and a state agency but shall not include any executive officer, legislative officer, judicial officer, member, or employee of any state agency in his capacity as such officer, member, or employee.

• “Invoice”: An itemized listing showing delivery of the supplies or performance of the service described in the order including all of the following: (1) The date of the purchase or rendering of the service;  (2) An itemization of the things done, material supplied, or labor furnished; and (3) The sum due pursuant to the contract or obligation.

• “Receipt of a proper invoice”: Receipt of both (a) an invoice as defined above and (b) the purchased equipment, materials, goods, suppliers, or services, both of which shall be free of defects, errors, discrepancies, and other improprieties. A state agency is in receipt of a proper invoice as soon as it has such invoice and such purchased or leased item(s) or service(s).

• “Voucher”: The document used to transmit a claim for payment and evidentiary matter related to the claim.

PROVISIONS

1. Generally

   1. The financial component of the Ohio Administrative Knowledge System (OAKS) (“OAKS Financials”) has a control preventing a voucher to be saved if it contains the same supplier identification number, invoice number, and gross amount within the same business unit. Agencies should be cognizant of this control when concatenating or creating the invoice number if it does not exist on the original invoice from the supplier. Agencies should not modify the invoice number field to allow a voucher to save without a legitimate business reason (e.g. reissuance voucher) and without validating it is not a duplicate payment.

   2. A payment should never be made unless an agency is in receipt of a proper invoice. A state agency is required to develop internal procedures to validate that an invoice is “proper” and appropriate to pay.

   3. Agencies should not combine supplier invoices within one voucher in OAKS Financials. Each invoice should be entered independently and have its own corresponding voucher number. Combining invoices will prevent OAKS Financials from detecting a duplicate payment and must be avoided.

   4. There may be situations in which a state agency receives an invoice that summarizes charges or activities and it is appropriate to process as one voucher. In these situations, the following guidelines must all be met:

      1. Meet the requirements of ORC 125.01(B) for a proper invoice;

      2. Contain a unique invoice number;

      3. Provide a description of services or itemization of charges; and

      4. Include any necessary backup documentation to substantiate the summarized invoice.

   5. A state agency should never voucher a summarized invoice or statement that has charges from other invoices that have been previously received and the potential to have been previously paid.

   6. State agencies should avoid making payments from source documents (e.g. quotations, receiving documents, store receipts); rather, an original invoice should be requested from the supplier. If a source document must stand in place as the invoice, a state agency must put additional controls in place to prevent a duplicate payment.

   7. State agencies should develop a method to validate an original invoice submission such as marking the date received and/or timestamping the invoice. Agencies should limit distribution and copies of an originally submitted invoice to necessary business needs.

   8. When multiple payment methods are used for processing payments (e.g. eSettlements, single payment vouchers, regular vouchers, payment card, credit memo), the state agency shall develop a process to ensure payment is not occurring through more than one method for the same goods or services.

2. Roles and Responsibilities

   1. State agencies are responsible to have effective internal controls in place to minimize the risk of making a duplicate payment.

   2. State agencies are responsible for exercising due diligence throughout the voucher payment process to include review and approval in OAKS Financials. An appropriate level of review and approval confirms the accuracy of invoice information entered in OAKS Financials, as well as, verifying the payment is proper and has not already been made for goods or services provided.

   3. The Office of Budget and Management (OBM) will notify state agencies when a potential duplicate payment is identified through use of data analytics tools or through a compliance review in OAKS Financials.

   4. State agencies are responsible for researching identified potential duplicate payments, determining if the payment is an actual duplicate, and providing a response to OBM if the payment was found through OBM’s review process.  

   5. State agencies are responsible for recovering amounts on all confirmed duplicate payments and documenting the recovery of payment in OAKS Financials.

3. Monitoring Process

   1. OBM will routinely review OAKS Financials enterprise data using data analytics tools or other methods for potential duplicate payments.

   2. OBM will notify the state agency point of contact(s) via email and provide a list of potential duplicate payment(s) identified during the regular review process. OBM will copy the Chief Fiscal Officer if any individual potential duplicate payment(s) on the list is equal to or greater than $10,000.

   3. State agencies will be given 10 business days to research and confirm whether the potential duplicate payment(s) identified are valid and provide a response back to OBM with information on each potential duplicate payment indicating whether the payment was duplicative or if it was a proper payment. OBM will inform an agency’s Chief Fiscal Officer when a response is not received within 10 business days and the agency has not requested an extension of time. Should a response not be received within 20 business days, then OBM will inform the Director or equivalent head of the state agency.

4. Recovery of Payment

   1. The full amount of payment must be recovered for all confirmed duplicate payments. A state agency may accept a refund or may accept a credit and apply to a future invoice. Credits may only be accepted by an agency if a future invoice to relieve the credit is anticipated within the same fiscal year. Credits applied within a re-occurring invoice (e.g. utility payments) can be accepted if it crosses into the subsequent fiscal year as long as there is not a significant lapse in time from the original payment.   

   2. State agencies may bill the supplier for the overpayment to maintain tracking during the recovery of payment process. If the billed amount is not received within forty-five days after the due date on the bill, the agency should consult with legal counsel and consider whether the agency is required to certify the amount due to the Attorney General in accordance with ORC 131.02.

   3. State agencies are required to attach refund supporting documentation to the duplicate payment voucher identified in OAKS Financials within 15 business days after the recovery of payment. In addition, a comment must be added to the duplicate payment voucher cross-referencing the recovered payments providing information that OBM can use to confirm repayment (e.g. deposit identification number, voucher number with credit).

5. Continuous Improvement

   1. The data derived from this process provides an opportunity to continue to improve business processes and internal controls in the accounts payable area. OBM will be monitoring for patterns or trends in false positives and/or confirmed duplicate payment(s) which may provide an opportunity for improvement within an agency or across the enterprise.