Question

1. List some duties that should routinely be separated as part of the internal control procedures for accounts receivable.

Answer 1

Answer is as under :
I . Following internal controls management will put into place to manage receivables
S.no	Particular	Internal control management will put
1	Receivables - Unrecorded	Management should use software such as tally, SAP, oracle to maintain all data of receivables and sales. Checker maker concept should be implemented. A standard sales recording process should be implemented by the management so all the receivables of the companies are recorded. Process is as under : 1. Invoice should be prepared on the basis of approved sales order for all sales ( Whether cash or credit or bank payment to keep the track record.) Receivable amount should tally with sales order 2. Logistic Executive should generates the invoice in the system and Logistics Head verifies the invoice , for correctness of quantity, customer name, price and other terms and condition and signs off on the invoice. 3. Security Personnel at the gate should verify the invoice and gate pass with the physical goods to ensure that the quantity and material description is correct and acknowledge the gate pass. Goods cannot leave the factory unless accompanied with the invoice and road permit.
2	Receivables - Understated	1)Management should delegate the authority and responsibility. The person who collects the cash and the person who prepares the invoice should be different. 2) Invoice prepared by account executive should be cross checked by higher authority 3) Internal audit should be made compulsory for each and every sales invoice 4) Accounts Executive should verify the invoices to ensure the correctness of price , quantity, customer description, tax rates and delivery challan and cross verifies with the gate pass to ensure that the goods invoiced have been dispatched and signs off the invoice. 5) After completion of recording of sales process, receivables should be checked and it should be equivalent to sales recorded
3	Receivables -Write off schemes	A monthly direct balance confirmation is compulsory in this case. Management should set the policy for the making provision for doubt full debt and for writing off the receivable. Every quarterly , receivable audit should be conducted by management to check that whether all receivable are written off as per the policy set.
4	Receivables - Lapping Schemes	1) Internal audit of cash receipt against invoice, 2) Ask for monthly balance confirmation from the customer, 3) Segregate the duties of cashier and receivable department 4) Have a cheque deposit box and cash box, so no cash will get stolen 5) Payment received from customer in bank should be mapped against invoice and sales order
5	Receivables - Unconcealed	Management of the company should assign a senior officer to check on monthly basis invoice raised against sales order and its accounting in book of account. Each Receivable account should be mapped against invoice