Check Yes or No or N/A (where not applicable). Where a No is indicated, some action may be required to rectify the situation. Cross-references (e.g., See FN 1.01) point to the relevant policy in the First Reference Internal Control Library. FN = Finance & Accounting PolicyPro, Volume 1; GV = Finance & Accounting Policy- Pro, Volume 2; OP = OMPP policies in FAPP electronic version; IT = Information Technology PolicyPro; NP = Not-for-Profit PolicyPro. Rev1 Rev2 Rev3 Rev4 Rev5 Rev6 Rev7 Rev8 Rev9 Rev10 Rev11 Are employees engaged in sales, handling cash and managing receivables competent for their assigned tasks, adequately trained and supervised? See OP 4.06, 6.06 Are sales terms and policies regularly communicated to staff? See FN 1.01, 1.02, 1.03, 1.04, 1.07; OP 6.06 Are there controls built into point-of-sale processes to reduce risk of loss due to fraud, theft or accounting error? See FN 1.01 Are customers informed (with store signs, etc.) that they should obtain receipts for every sale? See FN 1.01 Are cash register sales totals reconciled to sales and cash receipts totals? Is approval documented? See FN 1.01 Is the sales journal/subledger reconciled to the G/L? See FN 1.01 Are customer orders handled efficiently and accurately? See FN 1.02 Do you use current pricing and inventory information? See FN 1.02 Do controls exist to prevent unauthorized changes to standard price lists and customer master files? See IT Do you perform an independent matching of daily deposit totals to cash receipt records? See FN 1.02, 5.02 Do you use a standard price list for invoice preparation, and require documentation and approval for exceptions? See FN1.02 2008-2010 First Reference Inc. All Rights Reserved. 1
Rev12 Rev13 Rev14 Rev15 Rev16 Rev17 Rev18 Rev19 Rev20 Rev21 Rev22 Rev23 Does your system track order forms and do you follow up on those not processed in a reasonable time frame? See FN 1.01, 1.02 Do you verify customer order information with appropriate sales and marketing personnel and contact customer if needed? See FN 1.02, 1.03 Is a credit limit established for each customer? Do you ensure that no goods are shipped or services provided that exceed the limit without management approval? See FN 1.02, 1.04 Do your credit information systems provide accurate approved credit limits, current balances due, age of receivables and other important information? See FN 1.01, 1.02, 1.03, 1.04 Do you review shipping documents for completeness and compare to customer order for accuracy before shipment? See FN 1.02, 3.03 Does your system track shipping documents and do you investigate missing documents? See FN 1.02 Do you use standard shipping and contract terms and communicate non-standard terms to accounts receivable? See FN 1.02, 1.03 Do you match orders, shipping documents, invoices and customer information and investigate missing or inconsistent information? See FN 1.02, 1.03 Do you have procedures/system checks to prevent the same invoice being issued twice? See FN 1.02 Do non-routine sales (e.g., sales of scrap, sales to employees) require supporting documentation and approval? See FN 1.02 Do you produce a monthly report on pricing exceptions and non-routine sales? Is it reviewed by management? See FN 1.02 Do you use written sales contracts? Do they clearly identify the terms and conditions of the sale? See FN 1.03 2008-2010 First Reference Inc. All Rights Reserved. 2
Rev24 Rev25 Rev26 Rev27 Rev28 Rev29 Rev30 Rev31 Rev32 Rev33 Rev34 Rev35 Rev36 Do you have clear, well-understood and enforced credit policies? See FN 1.04 Is the customer credit limit reviewed on a regular basis and changes made as required? See FN 1.04 Is credit approval independent of the sales and accounts receivable functions? See FN 1.04 Are your sales commission policies clear and equitable? See FN 1.05 Do you have clear, well-documented warranty and guarantee policies? Are they understood by the staff who administer them? See FN 1.06. Do you have consistent customer refund policies, and are they followed by staff? See FN 1.07. Do you monitor customer returns or billing disputes relating to products delivered but not ordered? See FN 1.07 Do you authorize credit memos using individuals independent of the accounts receivable function? See FN 1.07 Does your system track credit memos and do personnel independent of the accounts receivable function match them with receiving documents? See FN 1.07 Do you monitor and follow up on accounts receivable consistently? Do you have a policy that outlines the process? See FN 1.08. Do collection staff take timely action on overdue accounts? See FN 1.08 Do you ensure that the preparation and mailing of statements is not done by the receivables clerk? See FN 1.08 Do you mail customer statements periodically, and resolve disputes using personnel independent of the invoicing function? See FN 1.08 2008-2010 First Reference Inc. All Rights Reserved. 3
Rev37 Rev38 Rev39 Rev40 Rev41 Rev42 Rev43 Rev44 Rev45 Rev46 Rev47 Rev48 Do you monitor the number of customer complaints regarding improper statements or invoices? See FN 1.08 Do you review correspondence authorizing returns and allowances? See FN 1.08, 7.05 Do you have written policies and procedures governing the recognition of revenue for accounting purposes? See FN 1.09 Are revenue recognition policies clearly communicated to accounting and operations personnel? See FN 1.09 Do procedures exist to ensure revenue is recorded in the appropriate accounting period (cut-off)? See FN 7.05 Do you reconcile the accounts receivable subsidiary ledger with sale and cash receipts transactions? See FN 1.09, 7.05 Do you have strong, well-documented controls governing pricing and discounting? See FN 1.10 Do you have documented procedures for calculating, collecting, and remitting sales taxes? See FN 1.11 Do you provide timely and accurate information needed by management and others to discharge their responsibilities? See FN 1.12, 2.12, 2.14, 3.05, 3.06, 7.01, 7.02, 7.03 Do you prepare financial reports on a timely basis and in compliance with applicable laws, regulations, rules or contractual agreements? See FN 1.12, 2.12, 2.14 Do you ensure completeness and accuracy of accounts receivable? See FN 1.12 Do you regularly produce a sales report showing sales by customer, product line, region, division, etc., including comparisons to budget and/or prior periods? See FN 1.12 2008-2010 First Reference Inc. All Rights Reserved. 4
Rev49 Rev50 Rev51 Rev52 Rev53 Rev54 Rev55 Rev56 Do you regularly produce a report showing sales returns and allowances? Does management investigate unusual variances? See FN 1.07, 1.12; GV 6.02 Do you regularly produce a report analyzing sales, cost of sales and gross profit against budget and/or prior periods? See FN 1.12 compare budgeted sales to actual sales and investigate variances? See FN 1.12, 7.02 review gross profit ratios and sales trends and document reasons for variances? See FN 1.12, 7.02 Does management regularly review period end/major transactions to ensure revenue recognition policies are being followed? See FN 1.09, 1.12, 7.02 review pricing exception reports and follow up when needed? See FN 1.02 review a reconciliation of aged receivables to control accounts? See FN 1.12 Does management investigate significant overdue customer accounts and follow up as necessary? See FN 1.08 2008-2010 First Reference Inc. All Rights Reserved. 5