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Audit of Accounts Receivable

3 Conclusion

The main purpose of this audit was to ensure that accounts receivable are being managed fairly, efficiently and effectively. In particular, it verified the control framework for the management of accounts receivable and the degree to which the Department is in compliance with applicable accounting regulations, policies and standards.

Audit criteria and techniques were developed in order to gather sufficient information on these subjects. The methodology used consisted primarily of interviews, data analysis, and a review of the relevant documentation.

The main observations show that, in general, the Department’s accounts receivable are managed in accordance with the principal policies, regulations and standards that govern them. However, the management framework for accounts receivable has certain gaps, and steps should be taken by management in order to improve its efficiency. Departmental Accounting should play a more active role in this regard.

The following measures could be put in place to improve the effectiveness and efficiency of the management of accounts receivable:

• develop and distribute guidelines on the processes that are currently in place, such as the collection and writing off of receivables and the invoicing of administrative charges and interest;
• review key controls, such as the segregation of duties, access to the accounts receivable module, the section on the writing off of interest in the departmental delegation instrument, and monitoring and reconciliations; and
• take the necessary steps to recover sums that are more than 365 days past due or write them off, as appropriate.

The Department could address most of the identified gaps with a reasonable amount of effort commensurate with the anticipated benefits. The review of the accounts receivable management process should, however, be integrated into other initiatives within the Department, such as the initiative on the state of preparedness of audit-ready departmental financial statements.

It would also be appropriate to re-establish active communications with the accounting offices. A few years ago, an annual national workshop was organized, and various financial topics were discussed at this workshop. It would be advantageous to organize such an initiative again in order to promote the sharing of best practices between Departmental Accounting and the accounting offices.