Case Study
Top-Down, Risk-Based Approach
Purchase to Pay Process
Overview
EAGLE Training Program 1
This case study describes the flow of a Top-Down Risk, Based Approach for an example
Purchase to Pay process. This case study is not all-inclusive for a Purchase to Pay process
and is to be used for informational purposes only.
Purchase to Pay Case Study
Case Study
Agency ABC
Risk Assessment Criteria
EAGLE Training Program 2
Account Risk Criteria
High
(Points – 3) Moderate
(Points – 2) Low
(Points – 1)
1 Size and
Composition Account balance greater
than $10 million Account balance less than
$10 million but greater
than $5 million
Account balance less than
$5 million
2 Transaction
Volume Multiple transactions per
day More than 100
transactions per year but
less frequent than one
transaction a day
Less than 100
transactions per year
3 Transaction
Complexity Transactions are complex
in nature (i.e. complex
calculations, requiring
significant financial
disclosures, complex
accounting guidance
associated with account,
etc.)
Majority of the
transactions are non-
complex. However, some
transactions require
additional attention due to
their complexity.
Transactions are routine
in nature.
4 Subjectivity and
Estimation 75% of the account
balance is based on
subjectivity or estimates.
Greater than 10% and less
than 75% of the account
balance is based on
subjectivity or estimates.
Less than 10% of the
account balance is based
on subjectivity or
estimates.
5 Inherent Risks Historically a high risk
account Historically a moderate
risk account Historically a low risk
account
6 Overall Score Total Score of 12 or
greater Total Score less than 12
but greater than 8 Total Score of 8 or less
Purchase to Pay Case Study
Case Study
Agency ABC
Risk Assessm
EAG
Purchase
ent Criteria
LE Training Program 3
to Pay Case Study
Process Risk Criteria
High
(Points – 3) Moderate
(Points – 2) Low
(Points – 1)
1 Size and
Composition Process impacts the
account balance by
greater than $4 million
Process impacts the
account balance less than
$4 million but greater
than $1 million
Process impacts the
account balance less than
$1 million
2 Susceptibility
due to error /
fraud
Historically a high risk
process Historically a moderate
risk process Historically a low risk
process
3 Complexity of
transactions Business and accounting
transactions are highly
complex
Business and accounting
transactions are
moderately complex
Business and accounting
transactions are not
complex
4 Homogeneity of
transactions Less than 25% of the
transactions are similar in
nature
Between 25% and 75% of
the transactions are
similar in nature
At least 75% of the
transactions are similar in
nature
5 IT dependency /
manual
intervention
Highly manual complex
processes. IT
infrastructure is an older
version with many
manual interfaces
Moderately automated
process. Highly automated process
6 Degree of
subjectivity /
estimation
75% of the account
balance impacted by the
process is based on
subjectivity or estimates.
Greater than 10% and less
than 75% of the account
balance impacted by the
process is based on
subjectivity or estimates.
Less than 10% of the
account balance impacted
by the process is based on
subjectivity or estimates.
7 Overall Score Total Score of 15 or
greater Total Score less than 15
but greater than 10 Total Score of 10 or less
Case Study
Agency ABC
Risk Assessment
Account Risk Assessment
Account Description
06/30/XX
Account
Balance
(in millions)
Size and
Composition
Transaction
Volume
Transaction
Complexity
Subjectivity
and
Estimation Inherent Risk Total Score
STATEMENT OF NET ASSETS
Accounts payable and accrued liability 11.9 3322212
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
Expenses
Salaries and Benefits 163.4 3322212
Supplies and Materials 35.6 3311210
Services 31.2 3321211
Scholarships and Fellowships 10.2 3232212
Travel 5.6 221128
STATEMENT OF NET ASSETS C E/O V/M R&O P&D
Accounts payable and accrued liability H M M L L
C – Completeness
E/O – Existence / Occurrence
V/M – Valuation / Measurement
R&O – Rights and Obligations
P&D – Presentation and Disclosure
Financial Statement Assertion Risk
EAGLE Training Program 4
Purchase to Pay Case Study
Case Study
Agency ABC
Risk Assessm
ent
Process Risk Assessment
Account Description
Account
Risk Related Significant Processes
Size and
Composition
Susceptibility
due to error /
fraud
Transaction
Complexity
Homogeneity
of transactions
IT dependency
/ manual
intervention
Degree of
subjectivity /
estimation Total Score
New Vendor Setup 2211219
Purchasing 32221111
Receiving 22123212
