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Revision Info This program was last reviewed/updated on [Click to Insert Date here]
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Step Audit Procedure By
I.
Objectives of the Review
1.
Evaluation of compliance with corporate policies and
procedures.
2.
Evaluation of overall efficiency and effectiveness of
process internal controls and procedures.
3.
Evaluation of processes and practices against known
best practices.
II.
Work Program Steps
Planning:
a) Review known best practices and research the
internet.
b) Set up binder.
c) Develop project plan and determine scope.
d) Prepare budget.
e) Plan a coordination meeting with Process Owner.
f) Obtain Accounts Receivable process/functional
overview and expense allocation.
4.
Obtain a copy of Accounts Receivable and Credit &
Collections policies and procedures. Review procedures
prior to beginning fieldwork. Draft any questions that
may be asked during interviews and while process
mapping.
Review the following known best practices:
Eliminate barriers to payment by offering
customers multiple payment options, flexible
billing cycles, and incentives to pay early.
Create a single point of contact for all incoming
customer calls regarding payments and use
technology to route the calls to the appropriate
service representative or automated activities
Perfd/ Workpaper
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Step Audit Procedure By
reduce processing costs and expedite cash flow.
Ensure that all employees with customer contact
work together to deliver a consistent message to
the customer regarding companys credit policies
and goals.
Use credit scoring to assign the customer a
credit rating that will trigger appropriate sales
and collections treatment.
Continuously update customers credit ratings
using a behavioural scoring system which
monitors customer payment behavior, usage
activity, and total customer account exposure
versus assigned credit limits.
Use the credit and collections process to
enhance customer satisfaction.
Develop, monitor, and motivate collections
specialists using individual and team
performance measures.
Use performance measures to select and
monitor outside collection agents, if it is cost-
justified to employ them.
Automatically initiate all treatment actions based
on a pre-programmed, customized treatment
timeline that details specific action steps for the
initial identification of delinquent account
customers based on customer credit rating/class.
Prioritize delinquent accounts for collections
follow-up, allocate appropriate collections
resources, and provide real-time access to
customer information.
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5.
Benchmark company accounts receivable process and
statistics to other similar companies (if applicable).
6.
Based upon the interviews, gain an understanding of the
following areas:
Overall accounts receivable process
Customer credit rating system/scoring process
Order entry process (High level review of A/Rs
role in the order entry process i.e. credit
classification, etc.)
Process for monitoring of credit standings
Reconciliation of shipped items to invoices; G/L
reconciliation
Invoicing process
A/R cash application process
Process for collection of overdue amounts
Process for writing off over due receivables
Management reporting (including process
performance metrics)
Reserve process (Coordinate with external
auditors to determine their process for review the
companys reserve values to ensure that there is
no duplication of effort).
7.
Obtain an understanding and evidence of the accounts
receivable/credit & collection process by performing
the following transaction testing:
Review the company's A/R trial balance for
unusual and/or large items and investigate, if
necessary. Items should be > 60 days and > 5%
of total A/R balance.
Review detail of significant past due balances
and discuss with management. Obtain and
document the probability of collectability and
plans for collection.
Verify compliance with existing policies and
procedures.
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