INTERNAL AUDIT - ACCOUNTS RECEIVABLE AND COLLECTIONS AUDIT University of Washington

1. 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

2. 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

3. 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

4. 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)

5. 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)

6. 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