PREPARED SPREADSHEETS,
THE GENERAL LEDGER AND FINANCIAL STATEMENT(S) FOR THE SAME PERIOD.
RESULTS OF
TEST SHOULD BE DOCUMENTED IN A TABLE WHICH LISTS THE FOLLOWING ITEMS:
CUSTOMER
NAME, INVOICE NUMBER, INVOICE AMOUNT, INVOICE DATE, DATE OF WRITE-OFF, AND
REASON FOR WRITE-OFF, IF AVAILABLE.
ALSO REPORT SERVICER'S PROCEDURES USED IN
WRITING OFF RECEIVABLES OR ATTACH AS AN EXHIBIT THE SERVICER'S WRITTEN
PROCEDURES.
FOR THE JUDGMENTALLY SELECTED SAMPLE OF FIVE (5) WRITTEN OFF
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RECEIVABLES, REPORT COMPLIANCE WITH THE SERVICER'S PROCEDURES AND TEST: (I) THAT
THE WRITE-OFFS WERE PROPERLY AUTHORIZED PER THE COMPANY'S POLICY AND PROCEDURES.
(C)
INVOICE RESOLUTION
(I)
FOR THE SAME TWENTY-FIVE (25) INVOICES SELECTED IN STEP 1 TRACE
THE AMOUNT OWING THROUGH TO FINAL RESOLUTION (BILLING, AGING, CASH RECEIPT AND
APPLICATION AGAINST THE INVOICE OR WRITE OFF/COLLECTION EFFORTS).
(II)
FOR THE JUDGMENTALLY SELECTED SAMPLE ABOVE, PERFORM THE FOLLOWING
PROCEDURES:
OBTAIN A COPY OF THE INVOICE AND SHIPPING MANIFEST, EXAMINE
SHIPPING MANIFEST TO ENSURE THAT A CUSTOMER SIGNATURE APPEARS EVIDENCING
DELIVERY, COMPARE THE SHIPMENT DATE AND INVOICE DATE, COMPARE THE TRANSACTION
DATE AND DUE DATE ON THE INVOICE TO THE TRANSACTION DATE AND DUE DATE PER THE
AGING REPORT. REPORT ANY FINDINGS.
(D)
DILUTIONS
(I)
JUDGMENTALLY SELECT A SAMPLE OF THIRTY (30) RECENT CREDIT MEMOS
FROM ACROSS THE VARIOUS BUSINESS LINES AND PREPARE A TABLE OUTLINING THE NATURE
OF THE CREDIT MEMOS AND THE BUSINESS LINES FROM WHICH THEY WERE GENERATED.
(II)
FOR EACH CREDIT MEMO SELECTED IN THE SAMPLE, RECORD THE RELATED
INVOICE DATE AND CREDIT MEMO ISSUANCE DATE.
(III)
CALCULATE AND REPORT THE WEIGHTED AVERAGE TIME LAG (WEIGHTED BY
DOLLAR VALUE) BETWEEN INVOICE AND CREDIT MEMO ISSUANCE DATE.
(IV)
DOCUMENT THE SERVICER'S PROCEDURES FOR IDENTIFYING NON-CASH
CREDITS FOR PURPOSES OF THE MONTHLY ACCOUNTS RECEIVABLE ROLLFORWARD, AND TEST
THE ADEQUACY OF SUCH PROCEDURES USING THE ANALYSIS REPORT TESTED IN THE
PROCEDURES OUTLINED ABOVE.
(V)
FOR A SUBSET OF TWENTY-FIVE (25) OF THE INVOICES AND CREDIT MEMOS,
TEST AND REPORT THAT THE AMOUNTS AND DATES ON THE INVOICES AND CREDIT MEMOS ARE
CONSISTENT WITH THE GENERAL LEDGER.
(VI)
DETERMINE THE AMOUNT, IF ANY, OF DEBIT MEMOS ISSUED AS OF [INSERT
DATE] AND [INSERT DATE].
(E)
RECEIVABLE CONCENTRATION
(I)
OBTAIN A LISTING OF THE TEN LARGEST OBLIGORS AND TEST THE
ACCURACY OF THIS INFORMATION BY TRACING AMOUNTS TO THE RECEIVABLE TRIAL BALANCE.
(II)
SCAN THE TRIAL BALANCE NOTING ANY UNIDENTIFIED OBLIGOR
CONCENTRATIONS.
DOCUMENT IF THE COMPANY IS PROPERLY AGGREGATING EXPOSURE AMONG
AFFILIATED OBLIGORS AND, IF MORE THAN ONE ENTITY IS ORIGINATING THE RECEIVABLES,
EXPOSURE AMONG THE VARIOUS RELATED ENTITIES. NOTE THE PROCESS BY WHICH THIS
AGGREGATION IS ACCOMPLISHED.
INCLUDE A LISTING OF THE LARGEST OBLIGORS WITH THE
REPORT.
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(F)
CREDIT FILE REVIEW
(I)
SELECT A JUDGMENTAL SAMPLE OF FIVE (5) CLIENTS WHICH HAVE
EXISTING CREDIT LIMITS.
BE SURE TO INCLUDE AT LEAST ONE CLIENT WITH A LIMIT
GREATER THAN $1 MILLION, AND NONE THAT ARE $20,000 OR BELOW.
ALSO, OBTAIN A
CURRENT CREDIT POLICY AND PROCEDURES DOCUMENT.
FOR THE SAMPLE SELECTED, TEST
THAT THE