Telecommunications Billings and Accounts Receivable


To evaluate the adequacy of controls over telecommunications billing and accounts receivable functions (i.e., to ensure that all income transactions are promptly recorded).


  1. Discuss all program steps, ICQ questions, and work paper format with the Director to determine applicability to the area to be audited. Obtain Director's approval of the Audit Program.

  2. Extract data from the department's FRS general ledger for the period under review. Determine the amount of outstanding accounts receivable recorded.


  1. Complete the Billing and Accounts Receivable ICQ.

  2. Gain a thorough understanding of the department's revenue cycle. Determine controls designed to ensure: sales are billed accurately and promptly, sales and accounts receivable are recorded accurately, and outstanding receivables are monitored and collected. Prepare flowcharts which include:
  3. Determine if the proper controls are present for manual charges and credit transactions.

  4. Verify that there are current written procedures for the revenue cycle.

  5. Determine if there is separation of the billing and accounts receivable duties.


  1. If pre-numbered workorder forms are used, examine the department's records to insure the department controlled the numerical sequence.

  2. Test a sample of workorders for the following attributes:

    NOTE: Provide documentation for at least one account in the work papers as an example. Also, record details of any discrepancies.

  3. Determine that credits issued were properly documented and authorized.

  4. Test samples of long distant carrier charges from MCI, AT&T, US West, and other carriers to determine if the billing statements contain any erroneous charges to Telecommunications.


  1. Obtain (or prepare) an aging of accounts receivable as of the audit date (or a listing of outstanding accounts if an aging is not feasible) to determine if department is effectively collecting outstanding accounts.

  2. Select a sample of accounts for confirmation and send confirmations (with department's invoices if possible). Consider positive and/or negative confirmations. Send positive confirmations on administrative billings and negative confirmations on BRS billing.

  3. Determine if there are controls to ensure that all customers are billed. Review the reconciliation procedures of the long distant carriers to Telecommunications' management system. Determine if controls exist to insure that Telecommunications is rebilling carrier charges to administrative and student accounts.

  4. Determine if the department is extending credit to customers with past-due balances by comparing current customers with customers with past-due balances. Inquire why any additional credit is extended.

  5. Obtain and review department's most current reconciliation of customer ledger balances (or other records by customer) with the aging of accounts receivable and the balance of accounts receivable recorded on FRS. If a current reconciliation is not performed, reconcile total of customer ledger balances to accounts receivable recorded on FRS.

  6. Document if there are any intra-university accounts receivable and determine if the reason for establishment of these accounts is in compliance with sponsored research policies and guidelines.

  7. Examine confirmation replies. Investigate and document explanations for any exceptions.

  8. Mail second requests for positive confirmation where replies were not received after 14-21 days from the date of the original request.

  9. If the customer did not return the confirmation, perform alternative procedures such as examination of customers' payment subsequent to the audit date as evidence of the existence of the account balance.

  10. Summarize confirmation results.

  11. Judgmentally select a sample of past due accounts receivable (or as an alternative, consider statistical sampling). Review collection efforts on each accounts selected and record details in the working papers. Review procedures for coordinating collection efforts with the Fiscal Office.

  12. Examine procedures and documentation for accounts receivable previously written off and review controls to insure all were properly authorized.

  13. Examine procedures and documentation for accounts receivable sent to campus Fiscal Office to put on BRS and review controls to ensure all were properly recorded on BRS.


  1. Review the department's method of setting rates to determine if cost studies are prepared, costs are tracked, and rates are approved.

  2. Send a confirmation letter to the Computing, Telecommunications and Information Services (CTIS) to confirm the latest rate table supplied to Telecommunications.

  3. Select a sample of long distance charges from administrative and student billing. Manually recalculate charges from rate tables and compare results.

  4. List additional audit steps determined necessary during the audit. Obtain Director's approval.

  5. Prepare interim recommendations, complete workpapers and prepare an audit draft report. Submit for review. Clear review notes. Complete audit report. Set up exit conference.

  6. If, as a result of your work on this program, you have any suggestions for revising this program, indicate below and describe your suggestions.