"IC Quest - Credit and Collections"
“Client Name” Internal Control Framework Credit and Collections “Name” Credit: Comments * 1. Do formal, written credit policies exist for each operating business unit? The credit policies should Yes No be consistent with overall corporate credit policy. 2. Is the credit administration function independent of the following functions: Order entry? Yes No Billing? General ledger? Sales? 3. Are individuals with system access to the accounts receivable sub-ledger (cash application, account write-offs) restricted from invoicing customers, Yes No issuing credit memos, and adjusting the general ledger? 4. Do procedures exist to ensure credit limits are established for each customer? Credit limits should Yes No be based on a review of the customer’s ability to pay. 5. Are credit limits entered into the system to ensure adequate tracking and monitoring of each customers Yes No outstanding and available credit? * For a “No” answer, cross-reference to either a compensating control or to audit work which has been performed or is to be performed. D-9 “Client Name” Internal Control Framework Credit and Collections “Name” 6. Are procedures in place to ensure customers exceeding their assigned credit limit or carrying past due balances are identified prior to processing additional transactions? Is credit management Yes No approval required to release orders to past due customers or customers exceeding the assigned credit limit? 7. Are assigned customer credit limits reviewed at least Yes No annually? 8. Are the terms of sale assigned to each customer Yes No based on the credit review? 9. Do procedures exist to ensure the credit worthiness Yes No of potential joint interest partners is reviewed? Collections: 10. Do formal, documented collection policies exist for each operating business unit? The collection policies Yes No should be consistent with the overall corporate collection policy. 11. Are procedures in place to ensure accounts receivable balances are routinely reviewed for balances Yes No exceeding the credit limit or specified terms of sale? 12. Do procedures exist to ensure collection efforts are initiated on those accounts determined to be past due Yes No or in excess of the assigned credit limit? D-9 “Client Name” Internal Control Framework Credit and Collections “Name” 13. In order to accelerate cash collections, are “lock-box” arrangements established with banks where Yes No remittances are sent directly to a post office box and collected/deposited directly by the bank.? 14. Do procedures exist to ensure all customer account Yes No write-offs are adequately approved and documented? 15. Do procedures exist to ensure customer inquiries are Yes No addressed and resolved in a timely manner? Reviewed by: Date: D-9