CHAPTER 7: ACCOUNTING, RECORDS, AND ASSOCIATED REGULATIONS
SOX Standards for Exempt Organizations It is best practice for exempt companies to also comply with SOX. Since O2C is a core process and can impact the financial statements, tight internal controls need to be in place to ensure that accounts are booked properly. The requirements in this law will help AR managers to protect the company’s cash from fraud, misappropriation, and errors. For example, the credit manager may notice that a sales rep is granting special discounts, terms, or other offers to a specific supplier, which violates policy. This should be reported and investigated immediately. Key areas for SOX compliance are as follows: An annual review of all policies and procedures; Signature approval for policies and procedures; Policy for analyzing new accounts; Systematic credit limits; Terms and payment methods based on best practices in compliance with anti-trust laws;
Internal controls testing; Segregation of duties; Random audits;
Customer information kept in a controlled environment with limited access; Archival process, with specified length of retention and destruction of files;
File destruction with adequate procedures Accurate and timely financial statements; and Signature approvals up through the CEO.
BEST PRACTICES
Nicole Amodeo, Manager of Billing and Cash Application for Crown Castle, shares her AR practices for SOX compliance: We’re unable to bill customers who are terminated/expired/on hold. Manual adjustments must adhere to an approval matrix. We conduct a daily review of cash reports. Monthly, we complete an AR reconciliation, bad debt, and unapplied cash review. Payments that cannot be fully applied to a customer invoice automatically go on account or to unapplied cash. Because we only have one role for AR, we manage segregation of duties through reporting strategies.
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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