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Product outline, the resources needed and how internal auditors can utilize the product in their profession: This product is intended to be seen as a reference for internal auditors which are interested in performing an audit over the Revenue Cycle, Billing and Collections. 2. Project description a) Proposed title: Internal auditors guide to revenue, billing and collections cycle. b) Project objectives: to provide a reference material for those auditors involved or interested in performing an audit over Revenue, Billing and Collections cycle. c) Proposed table of contents Chapter 1 Revenue, billing and collection cycle Estimated no of pages 1 3

1.1 Operating business cycle and revenue- general overview 1.2. Revenue, billing and collection cycle elements: - Receipt of a purchase order from the customer - Inventory stock status verification - Obtain credit approval - Prepare packing and shipping documents - Goods shipment/delivery - Invoice issuance - Periodic statements are sent to customer - Payments receipt - Flowchart presenting all the above elements and relationship between them 1.3 Revenues recognition 1.3.1 General rule (realized/realizable/have been earned through substantial completion of the activities involved in the earning process) 1.3.2 Exceptions from the general rule: 1.3.2.1 Revenue recognition prior to delivery of goods or performance of services: > Percentage of completion. > Completed contract > Comparison between percentage of completion and completed contract methods. 1.3.2.2 Revenue recognition after delivery of goods or performance of services. > Installment sales(uncertain cash collection) > Cost recovery(uncertain cash collection) > Comparison between installment sales method and cost recovery method > Cash method

14 pages: (out of which 6 pages will be used for practical examples)

1.3.2.3 Revenue recognition in case of sales returns and allowances 1.3.2.4 Revenue recognition in case of trade/sales discounts 1.3.2.5 Revenue recognition in case of warranties and maintenance contracts 1.3.3 Practical examples 1. 4. Revenue recognition-fraud detection: 1.4.1 Fraud risk factors: * external fraud indicators * internal fraud indicators 1.4.2 Methods used to inflate revenues and explanation of the techniques which auditors can use to identify these risks: 1.4.2.1 Booking fictitious revenues: > False journal entries > False sales to existing customers > False sales to fake customers 1.4.2.2 Cut-off frauds: > Hold the books open > Close the books early > Ship merchandise before the sale is final > Record revenue when services are still due > Recognize revenue before sales contracts are finalized > Stuff the channel 1.4..2 Bill and hold frauds 1.4.3 Example of checklist used for detecting fictitious revenues and timing differences Chapter 2 Working capital and cash management 2.1 Working capital general considerations: 2.1.1 Working capital elements (current assets -current liabilities, their elements) 2.1.2 Objectives of working capital (increase profitability, ensure sufficient liquid resources) 2.1.2 Working capital ratios (how they are determined and what is their meaning): current ratio, quick ratio, accounts receivable collection period, inventory turnover period, accounts payable payment period, sales revenue working capital ratio 2.2 Working capital management (what working capital management involves) 2.2.1 Managing inventories 2.2.2 Managing accounts receivable 2.2.3 Managing accounts payable.

6 pages

3 pages

2 pages

2.3 Accounts receivable management 2.3.1 Factors which should be taken into consideration when a credit policy is used 2.3.2 Credit control- assessing credit clients worthiness 2.3.3 Factors which should be taken into consideration in case of a credit extension 2.3.3Due amounts collection 2.3.4 Costs and benefits of giving credit 2.3.4 Cash sales versus credit sales 2.3.5 Ways of improving cash collection(invoice promptly, contact supplier before due date, dunning letters, obtain payment of undisputed amounts, personal visit etc) 2.3.6 Cash obtained by tighten up accounts receivable collection(use discounts, reduce credit terms, emphasize cash sales, accept credit cards, impose a penalty for late payments) 2.4 Cash management and control 2.4.1 Cash composition 2.4.2 Nature of cash management, reasons for holding cash 2.4.3 Cash budgets and cash flow forecasts 2.4.4 Dealing with shortfalls of cash (bank overdrafts, short-term bank, debt factoring) 2.4.5 Internal controls for cash: petty cash and bank reconciliations (causes of differences, steps in preparing a bank reconciliation) 2.5 Bad debts 2.5.1 Methods used for accounting for bad debts * Percentage of Outstanding Accounts Receivable * Allowance method * Percentage of sales * Aging of Accounts Receivable * Writing Off Uncollectible Accounts * Collection of an Account Previously Written Off 2.5.2 Bad debts forecast - a method used for reducing the amount of uncollectible accounts 2.6 Methods of maximizing cash: 2.6.1 Factoring of accounts receivable: 2.6.1.1 Debt factors and types of services provided by them > Trade receivables administration > Credit insurance > Debt finance 2.6.1.2 Benefits and disadvantages of using a factor 2.6.1.3 Description of factoring transaction 2.6.2 Pledging of accounts receivable 2.6.3 Assignment of accounts receivable Chapter 3 Multiple choice questions and answers Chapter 4: General internal control checklist related to revenue cycle Chapter 5: Example of audit program over revenue cycle, billing and

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5 pages

4 pages

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10 pages 5 pages 20 pages

collection cycle. This audit program will be following the revenue, billing and collection cycle steps: customer orders, shipment and delivery, invoicing, collection, returns for customers, warranties, credit sales, accounts receivable, cash management, bad debts, segregation of duties, etc Chapter 6: Glossary

5 pages

d) State why the product is needed in the marketplace: the product is indented primarily to be used as a reference material by those involved in performing audits over Revenue Cycle, Billing and Collections area. e) Describe the intended audience and typical user profile: auditors looking for a basic guide on this topic. f) Identify what problems/issues does this product addressin other words, whats the hook?: The product is intended to be seen as a guide for auditors involved in performing audits in this area. g) A statement of expected deliverables (manuscript, tools, checklists, etc.): The product manuscript will be submitted to IIA in around 5 months after the proposal acceptance by IIA. h) Itemized timeline and budget, including budget rationale: Chapter 1, 2 and 3: 5 months The time period necessary to write the includes the amount of time spend on reading different books, articles covering the revenue cycle and billing and collection areas. Taking into consideration that I am a full time employee I expect to spend around 3 hours per day on this project. I estimate that the budget needed for this project will be 1,500 USD. i) Review of competitors works and how this product differs: this product is prepared at the IIA request. Curriculum vitae Name: Daniela Bularda

Working experience: November 2002-present: ArcelorMittal, Internal auditor Performed activities:

Identify and assess the adequacy and effectiveness of the systems of financial, operational and management control and their operation in practice in relation to the business risks. Ensure compliance with established policies (including behavioral and ethical expectation), procedures, laws and regulations. Ensure the integrity and reliability of information, accounts and data, including internal and external reporting and accountability processes. Ensure that controls offer adequate protection against error, fraud and loss of all kinds. Ensure that services are provided in a way that is economical, efficient and effective. Ensure the follow-up of action taken to remedy weaknesses identified by Internal Audit review. Communicate risks, control weaknesses, and recommendations to executive and senior management through verbal presentations and written reports. Assist external auditors in connection with their audit of the company's consolidated financial statements. Assist General Manager and Manager of Internal Audit with development and implementation of Control Self-Assessment techniques Keep track of reports time spent for administrative tasks and audit projects. Responsible for completing final draft of audit report and reviewing final audit report with Manager of Internal Audit.

Professional qualifications: 2007: Certified Internal Auditor 2010: Certificate in Risk Management Assurance 2011: Certificate in Control Self Assessment 2009-present: enrolled in Romanian Chartered Accountant Certification 2009- present: enrolled in Romanian Financial Auditor Certification 2010- present: ACCA student Others: March 2011- present: developing and submitting question proposals for CIA certification