County of Riverside
OFFICE OF THE AUDITOR-CONTROLLER
STANDARD PRACTICE MANUAL
SUBJECT: ACCOUNTS RECEIVABLE AND
REVENUE
Internal Control Self-Assessment
SECTION:
12
POLICY NUMBER: 1208 SA
REVISED/
LAST REVIEWED: 7/01/06
CATEGORY:
INTERNAL CONTROL HANDBOOK
APPROVED BY:
_________________________________________
SUBJECT: Accounts Receivable and Revenue Self-Assessment of Internal Controls
SELF-ASSESSMENT OBJECTIVES: To identify strengths and weaknesses in the existing internal
control policies and procedures and provide guidance in the strengthening of those controls.
SCOPE: These guidelines apply to all County departments, agencies, special districts and authorities –
collectively referred to as “entities” - that are governed by the Board of Supervisors or that are considered
part of the County reporting entity.
Department heads (or Fiscal Managers) should periodically (at least bi-annually) assess internal controls by
completing the following questionnaire. Any answers in the “No” column should be evaluated and
considered for correction based on a benefits versus cost analysis.
SELF-ASSESSMENT QUESTIONNAIRE:
1.
2.
3.
4.
5.
6.
7.
8.
ACCOUNTS RECEIVABLE CONTROL ACTIVITIES
Yes
Are the accounts receivable subsidiary ledgers maintained by persons
other than those who (1) prepare, review or approve accounts receivable
documentation, (2) maintain the general ledger accounts receivable
account or (3) are involved in the cash receipts function?
Are the accounts receivable subsidiary ledgers reconciled to the related
general ledger accounts and differences investigated by persons other
than those who (1) post the accounts receivable transactions, (2) maintain
the general ledger account, (3) account for sales invoices and credit
memos or (4) are involved in the cash receipts function.
Is an aged analysis of receivables prepared weekly or at least monthly?
Is the aging analysis reconciled to the related general ledger account?
Are the formulas used for determining the allowances for doubtful
accounts reviewed periodically?
Are accounts receivable postings regularly reconciled to the sales and
cash receipts journals?
Are credit balances in accounts receivable investigated in a timely
manner?
Are invoices or monthly statements mailed to customers? If yes:
a. Are they sent by an employee who is independent of the accounts
receivable and cash functions?
b. Are invoice discrepancies and customer complaints investigated by
an employee independent of cash functions?
No
N/A
9.
10.
1.
2.
3.
4.
Yes
No
N/A
REVENUE/SALES
Yes
Are services or sales initiated by someone independent of cash receipts?
Are there adequate procedures for initiating services or sales to the
customers? If yes:
a. Is the credit of prospective customers investigated before it is
extended to them?
b. Are deposits regularly reviewed and compared to balances
outstanding?
Is there timely communication of new services and fees to personnel
responsible for billing changes?
Are there standard price lists, fees or billing rates? If yes:
a. Are they reviewed periodically?
b. When required by Board Policy or governmental code, are the price
lists, fees or billing rates recalculated and approved by the Board of
Supervisors?
No
N/A
Are accounts to be written off and other adjustments (returns, allowances,
credits and other reductions) determined by a person not involved in the
sales, accounts receivable recording or cash functions?
Does a responsible official, senior to the accounts receivable clerk,
approve journal entries affecting accounts receivable?
c.
5.
6.
7.
8.
9.
Are sales invoices, order forms, licenses or certificates:
a. Pre-numbered if manually prepared or sequentially numbered if
computer-generated and all numbers accounted for?
b. Checked for clerical accuracy?
c. Verified for prices or rates used?
Is the billing function performed by employees who are independent of
the cash functions?
Are sales journals, receipt books or revenue reports reconciled to the
postings to the general ledger?
Do all bills have established terms (e.g., 30 days from bill date)?
Are all bills generated within an established time after goods are
delivered or services are performed?
SECTION:
POLICY NUMBER:
12
1208SA
REVISED/
LAST REVIEWED:
Page 2 of 2
7/01/06