EVALUATION OF INTERNAL CONTROL OVER ACCOUNTS RECEIVABLE (A CASE STUDY IN PT X CIKARANG BRANCH OFFICE)

Abstract

One of the most important goals of a company is to get profit. In order to get maximum profit, company needs to implement internal control, because by implementing internal control, the company can operate efficiently and effectively. This research study is aimed to evaluate the internal control over accounts receivable, which is one of the important source of income for the company, especially fo PT ‘X’ as a rural bank institution. This research is a qualitative descriptive about evaluation of internal control regarding accounts receivable that has been applied in PT X. By using some research instruments such as interview, observation, and documentation the researcher will assess two of the five components of COSO framework internal control towards receivables of PT X, and those components are control environment and control activities. After doing research evaluation, it is found some strengths, such as company has maintained closely pre-numbered deposit slip. The company applied credit approval levels. The company has separated account receivables records function with collection and disbursement function. There is a verification process of credit realization. The researcher also found some weaknesses regarding internal control over account receivables. First, the company does not have any written Standard Operating Procedures (SOP). Second, the credit has been analyzed by marketing officer that prone to conflict of interest. Last but not least, the company has not established specific criteria in assessing credit worthiness of a customer. In order to improve internal control over receivables, the researcher suggests several things, such as the company has to make written standard operating procedures (SOP), credit must have been analyzed by independent person from finance function, and last but not least the company should establish specific criteria in order to assess credit worthiness of a customer.