If they tried to do a transfer using a BIC which containted a real IBAN the transfer could not be completely done in an automated process because the BIC is mandatory to do so, and an IBAN would simply not match any BIC in the world.
But... the "system" (both machines and people) behind this will most probably try to identify the bank and the account and will keep on trying. It will take a bit longer, though.
Note that the IBAN contains the bank code, so that it's quite unlikely that a transfer reaches a wrong account.
In summary, it's possible that there is a clerk somewhere in the world trying to solve the issue. And this clerk usually belongs to a delegate bank which is not the origin nor the end in the process.
SO: both the agency and you can check it, but will not be able to confirm anything until everyone in the payment chain finishes their job trying to do the transfer. This can take LONG (2 weeks would not be strange). The only thing the agency will be able to confirm in the meantime is that they don't have the money anymore in their account.
Just my experience!
Ruth @ MW
[Edited at 2007-08-28 14:30]
It's been 40 days past but the PM I've worked with in this company doesn't even informed me about this, I was only wondering why it takes time unlike before they we're prompt in payment ( maybe it depends on the PM to work with) and I didn't met any problem like this. I also completed another project with the same company right after that project on the same month but with different PM, purchase order and invoice, at this time I've entered the corresponding IBAN and BIC correctly and I received it first. So I was wondering why the other payment didn't arrived and again I didn't heard anything about this from my PM on this project. I tried to send her an email but she's not yet replying. Anyway, I try to send her again and do the advice of Lori Cirefice.
Or else it will end up like what you said, they don't have the money anymore. Hope its not, it's not a small amount that easy to forgive and forget.