What Sarbanes-Oxley means to credit, collections, A/R and A/P professionals is that a high level of detailed information about cash flow needs to be maintained along with tight control over financial processes. As senior finance executives will be scrutinizing balance sheet transactions, it is imperative that a strict set of internal controls be set up for Accounts Receivable, Accounts Payable and related cash management processes.
Section 404 requires that companies comply with the following high level requirements around A/R and A/P processes
- Segregation of A/R and A/P related duties
- Documentation of A/R and A/P policies and procedures
- Internal controls documents
- Clear controls around cash flow decisions
- Clear procedures around off-balance sheet transactions
- Clear procedures around revenue recognition and write-offs
- Corrective action plans
- Full testing and evaluation of A/R and A/P controls
Emagia On Demand software is a technology platform that satisfies documentation, audit and internal control requirements for SOX compliance on Section 404. The following facets of key internal controls among others are facilitated with the Emagia solution:
- A/R and A/P transaction records and history are fully maintained
- Credit granting decisions are properly maintained with full audit trail
- Supporting documents such as financial information, contracts, credit application, collections correspondence, etc can be fully maintained
- Disclosure of off-balance sheet transactions are available
- Segregation of duties across credit management, A/R, collections, cash application and A/P is available
- Full audit trail of invoice collections, disbursements and write-off activities are fully supported
- Approval processes for dispute resolution and write-offs are supported
- A/R related issues with respect to revenue recognition and revenue deferment are maintained
- Real-time reporting of revenue at risk and A/R and A/P portfolio analysis
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