LIMIT WAS APPROPRIATELY AUTHORIZED (AS PER THE COMPANY'S AUTHORIZATION
MATRIX), A CURRENT REVIEW WAS COMPLETED, AND THAT RELEVANT DOCUMENTATION IS ON
FILE.
(G)
COLLECTION METHODOLOGY & CASH APPLICATION
(I)
OBTAIN A CURRENT LISTING OF THE BLOCKED ACCOUNT(S) AND
CONCENTRATION/DEPOSITORY ACCOUNT(S) INTO WHICH COLLECTIONS ON PURCHASED
RECEIVABLES ARE DEPOSITED.
ATTACH THIS LISTING AS AN EXHIBIT TO THE REPORT.
(II)
FOR THE SAME MONTHS SELECTED IN PROCEDURE #1, OBTAIN FROM
MANAGEMENT A TABLE SUMMARIZING COLLECTIONS BY METHOD OF RECEIPT, IN A FORMAT
SIMILAR TO THE ONE SHOWN BELOW:
METHOD OF RECEIPT
MONTH
($000s)
%
Obligor mailed/sent payment directly to a lockbox
$
Electronic payments (ACH/wire) to a account
Other (describe)
Total Deposits related to Collections per Bank Statement(s)
$
%
Total Collections per Monthly Report
Difference (ask Management for an explanation of significant causes of the
difference, if any)
(H)
INTRA-MONTH TEST
(I)
OBTAIN AND ATTACH, IF AVAILABLE, DAILY ACCOUNTS RECEIVABLE
BALANCES FOR A RECENT MONTH.
OTHERWISE, OBTAIN AND ATTACH DAILY SALES AND
COLLECTION INFORMATION FOR A RECENT MONTH.
PREPARE A CHART SUMMARIZING THE
DATA.
(I)
MISCELLANEOUS
(I)
DISCUSS WITH MANAGEMENT THE EXISTENCE OF ANY REBATE PROGRAMS.
OBTAIN EVIDENCE OF ANY CURRENT ACCRUALS FOR REBATE PROGRAMS AND CALCULATE THE
AGGREGATE AMOUNT OF SUCH ACCRUALS.
INQUIRE HOW REBATES ARE PAID (E.G. BY
SEPARATE PAYMENTS OR BY OFFSETTING AGAINST ACCOUNTS RECEIVABLE).
DOCUMENT ANY
DISCUSSIONS.
(II)
CROSS AGING - DOCUMENT IF THERE ARE CUSTOMERS WITH CURRENT
BALANCES WHO ALSO HAVE MORE THAN 25% OF TOTAL BALANCES OVER SIXTY (60) DAYS PAST
DUE.
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(III)
DISCUSS WITH MANAGEMENT ANY OFFSET PRACTICES AND DOCUMENT YOUR
FINDINGS.
SPECIFICALLY DISCUSS ANY OBLIGORS THAT ARE ALSO VENDORS, AND DOCUMENT
THE TREATMENT OF RESPECTIVE PAYABLE AMOUNTS FOR THE PURPOSES OF THE
SECURITIZATION PROGRAM.
(IV)
OBTAIN THE [INSERT MONTH] AND [INSERT MONTH] MONTH END GENERAL
LEDGER TRIAL BALANCES.
DISCUSS THE NATURE OF UNUSUAL CONTRA ASSET AND LIABILITY
ACCOUNTS WITH MANAGEMENT TO IDENTIFY POTENTIAL NON-CASH OFFSETS TO ELIGIBLE
RECEIVABLES.
(V)
INQUIRE IF THE RECENT INTERNAL AUDIT OF THE CASH COLLECTIONS AND
PROCESSING AREA HAS BEEN COMPLETED AND IF SO DISCUSS FINDINGS WITH INTERNAL
AUDIT PERSONNEL.
REPORT ANY FINDINGS.
(VI)
PER MANAGEMENT INQUIRY, NOTE THE TYPES OF TAXES THE COMPANY PAYS
AND NOTE WHETHER THE COMPANY IS CURRENT ON ALL TAXES (INCLUDING PAYROLL).
FOR
PAYROLL TAXES, OBTAIN THE LAST PAYROLL OF [INSERT DATE] AND TEST THAT THE
FEDERAL AND STATE PAYROLL TAXES DUE FOR THIS PAYROLL WERE REMITTED BY THE
COMPANY.
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