INTERNAL AUDIT ACCOUNTS RECEIVABLE AND
COLLECTIONS AUDIT
University of Washington
August 11, 2011
Kim Herrenkohl, Director
Western Washington University
Office of the Internal Auditor
360-650-3435
Kim.Herrenkohl@wwu.edu
Training Objectives
• Discuss common fraud risks
• Objectives of an operational accounts
receivable and collections audit
• Discuss WWU’s Audit Program
• Discuss WWU’s Audit Report
Common Fraud Risks in a
Receivables Process
• Improper separation of key processing
duties between cash receipting and A/R
system capabilities (process credit memo
or write off as bad debt)
• Create fictitious refund checks
• Write off debts without going through
collections for relatives or for kick backs
• Less incentive in Higher Education for
fraudulent overstatement of receivables
Washington State Receivables
Frauds
• Fire Department was notified by former
accountant’s bank about FD checks deposited or
cashed. ($77,153)
• Parks employee had complete control of
registering, receipting money and reconciling
and falsified the documents ($6,320)
• Student notified College of a payment that was
not properly posted to his account. Found the
cashier was manipulating accounts and
misappropriated part of the payment ($11,260)
Objectives of Accounts
Receivables & Collections Audit
• As Internal Auditors (not financial
statement auditors), our audit scope
typically includes reviewing for:
 Effectiveness
 Efficiencies
 Compliance with policy & regulation
 Safeguarding assets (reasonable
internal controls)
Western Washington
University’s Policies
http://www.wwu.edu/policies/divisions.shtml
• Select “Business & Financial Affairs
Division “
• Scroll down to policies starting with
#5352 - Billing and Collection