Internal Controls — Accounts Receivable


  • Ensure that appropriate records are maintained for all businesses, users of government services, and individuals or entities against whom taxes or fees are assessed.
  • Billing of taxes and services performed promptly and in proper amounts; self-assessed taxpayers monitored; exemptions are only provided to those authorized.
  • All collections are properly identified, control totals developed, and collections promptly deposited intact and applied to the proper accounts.
  • Billings, adjustments and collections are properly recorded in individual receivable accounts.
  • Revenues, collections and receivables are properly accumulated, classified and summarized in the accounts.

  • Government loses revenue as a result of billing errors. Eligible parties who have failed to file tax or other informational returns are not identified.
  • Systems may permit unauthorized removal of taxpayers or others from rolls. Employees divert revenue for personal use.
  • Billings are inaccurately or incompletely prepared. Sales, income and other self-assessed taxpayers may pay amounts less than required by law.
  • Revenue is lost due to inadequate procedures or improper accounts. The recording of cash receipts and the application of funds to the proper accounts are delayed or withheld.
  • Employees divert receipts for personal use. 
  • Taxes collected by another level of government are not properly collected.
  • Amounts are improperly written-off and collections are diverted to personal use. Account balances are reduced by unauthorized transactions.
  • Cash flow from payments is delayed by late billings or deposits. Errors in transaction postings to detail or control accounts are not detected in a timely manner.
  • Problem accounts do not receive prompt attention, resulting in revenue or cash-flow loss.