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Sample Revenue Control and Management Policy

Note: This document should not be used as a substitute for developing a Revenue Policy specific to your
governments unique needs.

Proper controls over revenue are important to ensure strong financial management practices.
This policy applies to all revenue collected, except where state or federal laws supersede.

Internal Controls - All aspects of cash receipts and accounts receivable shall be subject to
proper internal controls. Management of each department shall be familiar with the Revenue
Policy and establish standard internal controls that are properly documented and followed by
staff members to ensure compliance with the policy. Recommended internal controls shall
include:

Segregation of duties for authorization, recording, and custodian functions. In
circumstances where this is not feasible, other mitigating procedures shall be established.

Daily processing of cash receipts and accounts receivable transactions.

Timely deposit of funds.

Timely reconciliation to the general ledger and other supporting accounting ledgers.

Utilization of automated system resources for enhanced processing and reconciliation.

Establishment of physical security procedures. These shall be reviewed periodically.

Notification of management and internal audit upon any suspicion of fraud. Management
shall then notify the appropriate authorities (e.g., law enforcement, state agencies) in a
timely manner for further investigation.

Periodic review by internal audit of internal control compliance. If management has a
suspicion regarding non-compliance with internal control directives, internal audit shall
be notified.


Accounting Practices All receipts and receivables shall be recorded in keeping with current
authoritative standards and practices.
Revenue shall be recorded in the proper general ledger account.
Revenues shall be recorded in the proper fiscal accounting period.



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Billing Practices - Accounts receivables shall be established for services provided in advance of
payment.

All initiated bills shall have a due date of [#of days] days from the bill date, unless
otherwise stated per ordinance or resolution. All bills shall be generated within [#of
days] days after initial service provision.

When services are provided by the department prior to the receipt of funds for such
services, an on-going accounts receivable record shall be maintained.

Bills shall be generated in a centralized accounts receivable system wherever possible.
When bills are generated from a stand alone system, the receivable shall be recorded in
the accounts receivable system that is transferred to the central general ledger and
reconciled to the general ledger within [#of days] days of the close of the fiscal
accounting period.


Depositing of Received Funds - Treasury management shall serve as primary recipient for all
revenue collection sites. Each department with remote collection responsibility shall establish
and maintain an adequate system of internal controls for receipts. Controls shall include, at a
minimum, the following:

Numerically controlled (accounting system generated or paper) official receipts with the
printed name of the department for all revenue. Receipt books issued by the government
must be accounted for numerically. The use of generic non-numbered receipts is strictly
prohibited;

The method of payment (e.g. cash, check or credit card) shall be indicated on the receipt;

Identification of the individual receiving payment on receipt;

Wherever possible, the receipt shall allow for immediate revenue account classification in
conformance with the established chart of accounts. If not possible, the department and
fund shall be indicated;

Restrictively endorsement (stamped for deposit only) of checks at the point and time of
collection;

Reconciliation of collections by an individual not involved in the receipting or posting
process or establishment of mitigating controls;

Recording of receipts in the financial accounting system on a timely basis;

Timely posting of adjustments with supervisory approval required;

Timely reconciliation and deposit of funds received

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o Remote Sites (those sites remote from the primary treasury function)
Dollar Threshold: At any such point a remote collection site accumulates
in the aggregate over $[dollar amount] in cash and/or $[dollar amount] in
checks; such funds shall be deposited by the beginning of the next
business day.
Time Threshold: All collections shall be deposited within five business
days of receipt.
o Those sites in close proximity to the primary treasury function shall make daily
deposits;
Securing of un-deposited funds in a locked place, such as a safe or secure drawer;

Accounting of any differences in the cash reconciliation process in a cash
overage/shortage account. The change drawer shall not be used for the difference;

Prohibition of use of change drawer to cash personal checks.

Escrowed Funds - Funds received by the entity in advance of revenue recognition or funds
anticipated to be remitted back to the payee shall be deposited into an interest earning escrow
liability account.

Escrowed funds shall only accrue interest back to the payee if explicitly stated in the
escrow agreement; otherwise interest accrues to the associated fund.

Upon the entity meeting the criteria for revenue recognition, such escrowed funds shall
be transferred in a timely manner and recognized as revenue in the applicable fund.

For performance guarantee escrows, funds shall be returned to the payee upon
compliance or transferred to the applicable fund for non-compliance.


Collection - Each department shall establish and maintain an adequate system of internal
controls to ensure that receivables are collected in a timely manner.

All accounts receivable shall be recorded by the entity to permit an analysis of the aging
of such receivables (e.g., <30 days, 30-60 days, etc.).
For those accounts that become past due, proper delinquent notice shall be provided to
the payee and continued service restricted, unless continuation of service is required by
law or policy, until such accounts are current.
o For those accounts that are greater than [#of days] days past due and over
$[dollar amount], notice and supporting detail shall be provided to the appropriate
collection division for further collection efforts.

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o To facilitate collection efforts, departments shall establish information criteria as
part of the initial credit application process with the customer (e.g., bank account
number, social security number or drivers license number, federal ID number,
etc.).
o Assignment to a collection agency shall be considered. When cost effective, the
government-wide selected collection agency shall be utilized to assure maximum
collections.

Returned Checks Each department shall establish and maintain an adequate system of internal
controls for returned checks.
Unless otherwise stated per ordinance or resolution, all checks returned due to
insufficient funds shall be processed by the treasury division with departmental
assistance.
Fees shall be charged for the returned check in accordance with applicable statutes or
established practices. Returned checks shall be processed at least twice through the
entitys financial institution.

Bad Debt - Each department shall establish and maintain an adequate system of internal controls
to ensure the accurate and timely recognition of an allowance for doubtful account and bad debt
expense.
The amount of the allowance for doubtful accounts shall be based upon the percentage of
receivable method.

The computation of the allowance for doubtful accounts shall be performed annually
based upon the aging of the receivables and recent history of write-offs at fiscal year end,
subject to concurrence by the external auditors.

Write-offs
o Non-tax balances
o For balances less than $[dollar amount] that are greater than [#of days] days
delinquent, all such amounts shall be eligible for write-off upon department
heads written concurrence.
o For balances greater than $[dollar amount], collection efforts shall be
performed for a period equivalent to the statute of limitations or less if
bankruptcy has been discharged for account, business no longer exists, or
individual is deceased, at which point such amounts shall be written-off upon
department heads written concurrence.
o For any account written-off, such customer information shall be retained for
as long as practical in an automated system to have continued enforcement of

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service denied on credit until previously written-off balances have been
satisfied.
o Write-offs to taxpayers account for general property tax balances shall be performed
in accordance with state regulations.

Budgetary Review Responsibility revenue collections and accounts receivable shall be
monitored in a timely manner.
Revenue initiating departments shall have oversight in the formulation of revenue
budgets.

Revenue budget estimates shall be supported with documented variable assumptions
(base, rate, etc.).

Monitoring of revenue budget shall be performed in a timely manner throughout the
fiscal year and shall include an analysis of actual vs. budgeted variances. Revised
forecast shall be communicated to the budget division timely.

Continued compliance of revenue with all laws and/or regulations shall be the
responsibility of the revenue initiating department.

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Sample Revenue Policy Checklist

Note: This document should not be used as a substitute for developing a Revenue Policy specific to your
governments unique needs. The information below is a list of topics that are suggested to be addressed
in a Revenue Policy.

Internal Controls
Segregation of duties
Reconciliation of receipts and accounts receivable to the general ledger
Physical security procedures
Maximize utilization of automated system resources
Fraud notification
Internal audit periodic review

Accounting Practices
Recording in proper account
Recording in proper fiscal accounting period

Billing Practices
Timing of bill production
Timing of bill due dates
Establish an accounts receivable record
Maintain an accounts receivable record

Depositing of Received Funds
Data to appear on the receipt
Timing of receipt recordation
Timing of deposit of funds
Reconciliation of collections
Physical security of un-deposited funds
Escrowed Funds

Collection
Analyze aging of receivables
Timing of delinquent notice issuance
Establish collection responsibilities

Returned Checks
Processing details
Associated Fees

Bad Debt
Establish method of calculation
Timing of calculation
Write-off criteria

Budgetary Review Responsibility
Assign oversight responsibility
Budget estimate shall include written support
Monitoring shall be performed timely
Compliance with laws and regulations