Segregation of Duties Questionnaire - Accounts Receivable

SEGREGATION OF DUTIES QUESTIONNAIRE:
ACCOUNTS RECEIVABLE
INSTRUCTIONS
A fundamental element of internal control is the segregation of certain key duties. Adequate segregation of duties
reduces the likelihood that errors – intentional or unintentional – will remain undetected by providing for separate
processing by different individuals at various stages of a transaction, and for independent reviews of the work
performed.
The basic idea underlying segregation of duties is that no employee or group should be in a position to both
perpetrate and to conceal errors or fraud in the normal course of their duties. In general, the principal incompatible
duties to be segregated are:
• Custody of assets.
• Authorization or approval of related transactions affecting those assets.
• Recording or reporting of related transactions.
• Execution of the transaction or transaction activity.
In addition, a control over the processing of a transaction generally should not be performed by the same
individual responsible for recording or reporting the transaction.
The duties to be considered in determining the adequacy of segregation of duties among those responsible for
accounts receivable transactions are listed in the following table. In smaller organizations, these duties may also
need to be reviewed along with those of other functions, as some individuals may have responsibilities in more
than one area.
List the names of individuals responsible for each function in the column indicated. If a function is performed by a
computer application, then indicate “computer” or “IT” in the applicable column. If an individual performs a function
by using an IT application, make an “IT” notation (where applicable) to facilitate consideration of the relevant
application access controls.
Review the table for individuals whose names are listed in more than one column, and then determine whether
that represents a potential lack of segregation of duties. Also consider whether individuals are performing
incompatible duties within the same column. If an individual is identified as performing incompatible duties, all
duties performed by that individual should be reviewed to determine the effectiveness of those duties or whether
there is a risk of fraud due to the lack of segregation of duties.
Completion of this table is intended to highlight potentially conflicting duties but is not intended to be the only
method of identifying all conflicts. Additional reporting and review processes or spot checks may be included to
ensure identification of fraud.
Custody of Control
Control Procedure Authorization Recording
Assets Procedure
Entry of Orders
Approval of Credit
Approval of Access to Credit-

Related Data Files
1 Source: www.knowledgeleader.com
Custody of Control
Assets Procedure
Authorization of Shipment
Preparation of Shipping
Documents
Handling of Inventories for

Shipment
Preparation of Billings
Verification of Billings
Approval of Access to Pricing-

Related Data Files
Accounting for the Numerical

Sequence of Sales Invoices
Maintenance of the Sales Journal
Maintenance of Accounts
Receivable Records
Reconciliation of the Accounts

Receivable Records with the
General Ledger Control Account
Review and Approval of the

Monthly Aged Accounts
Receivable Trial Balance
Preparation of Monthly Customer

Statements
Review and Follow-Up of Customer

Inquiries and Differences
Handling of Cash Receipts from

Customers
Authorization of Write-offs of
Uncollectible Accounts
Authorization of Credits to
Customers
Receipt of Goods Returned for

Credit
Initiation of Credit Memos
Approval of Credit Memos
Custody of Control
Assets Procedure
Approval of Credits for Allowances

Granted to Customers (Other Than
for Returned Goods)
Maintenance of Credit Memo

Reports
Verification That Credit Memos are

Generated When Sales Returns
and Allowances are Granted
Opening Mail and Listing Checks
Handling Receipts of Currency
Preparation of Bank Deposits
Comparison of the List of Checks

to the Bank Deposit
Maintenance of the Cash Receipts

Journal
Reconciliation of Bank Accounts

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SEGREGATION OF DUTIES QUESTIONNAIRE:

Approval of Access to Credit-

Handling of Inventories for

Approval of Access to Pricing-

Accounting for the Numerical

Maintenance of the Sales Journal

Reconciliation of the Accounts

Review and Approval of the

Preparation of Monthly Customer

Review and Follow-Up of Customer

Handling of Cash Receipts from

Receipt of Goods Returned for

Initiation of Credit Memos

Approval of Credit Memos

Approval of Credits for Allowances

Maintenance of Credit Memo

Verification That Credit Memos are

Opening Mail and Listing Checks

Handling Receipts of Currency

Preparation of Bank Deposits

Comparison of the List of Checks

Maintenance of the Cash Receipts

Reconciliation of Bank Accounts

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