Testing involved activities such as tracking the types of adjustments resulting from billing errors and using this information for training purposes, assessing an existing customer's credit worthiness in the event of additional sales orders, and documenting policies and procedures related to the credit memo and write-off process. The following observations were noted as a result of testing:
Collection efforts by the branch offices and corporate collections personnel are not always performed in accordance with company policy.
Credit policies are not consistently adhered to by sales personnel or consistently enforced by management.
Polices on processing and authorizing credit memos and write-offs are not clearly defined.