Accounts Receivable Cycle

Self Assessment of Internal Control Questionnaire

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Objectives and Risks
Objectives Risks
Ensure that appropriate records are maintained for all businesses, users of government services, and individuals or entities against whom taxes or fees are assessed. Government loss of revenue as a result of billing errors.

Eligible parties who have failed to file tax or other informational returns not identified.

Systems may permit unauthorized removal of taxpayers or others from rolls.

Employees afforded the opportunity to divert revenue to personal use.
Billing of taxes and services is performed promptly and in proper amounts; self-assessed taxpayers monitored; exemptions are only provided to those authorized. Billings inaccurately or incompletely prepared.

With knowledge that there is no effective audit or review function, sales, income and other self-assessed taxpayers pay amounts less than required by law.

Revenue lost due to inadequate procedures or improper employee accounts.
All collections are properly identified, control totals developed, and collections promptly deposited intact and applied to the proper accounts. Withholding or delaying the recording of cash receipts and application of funds to the proper accounts.

Employee diversion of receipts to personal use.

Failure to receive proper distribution of taxes collected by another level of government.

Amounts improperly written-off and collections diverted to personal use.
Billings, adjustments and collections are properly recorded in individuals receivable accounts. Account balances reduced by unauthorized transactions.

Cash flow from payments retarded by delayed billing or deposits.
Revenues, collections and receivables are properly accumulated, classified and summarized in the accounts. Errors in transaction postings to detail or control accounts not detected in a timely manner.

Tampering with account balances encouraged by knowledge that controls are ineffective.

Problem accounts do not receive prompt attention, resulting in revenue or cash-flow loss.