 In this presentation we will discuss the segregation or separation of duties related to the revenue recognition process. So we've discussed the components of the revenue recognition process. Now we're going to talk about one of the first a word from our sponsor. Well, actually these are just items that we picked from the YouTube shopping affiliate program, but that's actually good for you because these aren't things that were just given to us from some large corporation, which we don't even use in exchange for us selling them to you. These are things that we actually researched, purchased, and use ourselves. Bayer Dynamic? Not sure if I said that right, but this is the DT770 Pro 250 OHM Studio Reference Closed Back Headphones. I wear headphones basically every day for a large part of the day. They are important to me, therefore I've gone through many different kinds of headphones. I've had these for some time and they've worked quite well. 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You can purchase one at a time or have a subscription model, giving you access to all the courses, courses which are well organized, have other resources like excel files and pdf files to download and no commercials. The major types of controls with relation to it and this is one of the major types of internal controls with relation to any type of process that we are going to set up. We as the auditor want to consider the system, the separation of duties that will be involved in it to understand the control system. If we were to be implementing some type of system, some type of accounting system, we would also want to be considering the separation of duties as we do so. Also note that as we think about separation of duties, there is kind of a best practices for separation of duties, but also as we have larger organizations, then of course we'll have an increase in the separation of duties. So again, if you're thinking about a large publicly traded company, you're going to have a lot more separation involved as you would with a small type of organization. When we are considering the implementation or testing of internal controls, we have to consider the size of the organization to determine what the appropriate number of internal controls will be. Also note that as an organization grows, you're going to need more people involved and those people might not be as tightly knit and therefore you might need a more kind of separation of duties involved within it as well. The goal of the separation of duties is going to have those key points within the process that we're talking about revenue recognition here where there could be errors or there could be fraud to take place. That's where we want the separation or segregation of duties so that we have at least two people involved in those processes and therefore they're less likely to make an error that would be catched by those two people and if fraud was wanting to be committed, it would take two people to collude to work together in order to consciously commit the fraud. So the fact that there would be two people involved makes it less likely for it to take place. So here's going to be our table. We've got the revenue and accounts receivable function here. So that's going to be on the left column and then we're going to have the entities or the parts of the organization that will be involved in it, including the order entry, credit, shipping, accounts receivable, cash receipts, IT and the treasurer. So these are the people or organizations or places within the organization that will be involved in the processing of these functions and we're going to see the separation as we go. So we have the receiving and preparing of customers orders that's going to be in order entry. Then the approving credit done separately within credit and then we have the shipping goods to customers and completing shipping documents. That's going to be separate again, shipping department. Then we have the preparing of the customer invoice, the preparing of the customer invoice against separate. We have the accounts receivable, which may be aided by the IT department, depending on how the IT system is set up. Then we have the updating of accounts receivable records for sales, the updating again accounts receivable assisted by IT as necessary. Then we have the receiving the customer remittance. So that's going to be that little remittance form that's going to be coming back along with the check, hopefully that we would receive in the mail that's received separately by the cash receipts. So now we have a separate person involved of the receipt of the remittance. And then the updating of the accounts receivable records is going to be separately done by once again accounts receivable. So you could see the handling here of the remittance separate from the updating of the records. And then we have the and that's of course going to help with any kind of problems that hopefully with regards to misappropriation or errors or some type of fraud with regards to the receipt. And then we've got the preparing accounts receivable age trial balance. Once again, the accounts receivable aging trial balance, the kind of the subsidiary type of ledger by an aging report done by the accounts receivable and assisted by IT if necessary as necessary. Authorize accounts receivable write off. So what about the write off process of accounts receivable meaning when we determine that accounts receivable is going to be bad debt, we're going to write it off to bad debt. Again, that's another area that we want to be concerned about make sure that we have separation of duty in because we can imagine a situation where that could be a problem or a place where fraud could take place. And that's going to be done separately by authorization by the treasurer. So you could see our process here. Now notice there's a lot of people involved here. This would be a fairly extensive type of organization within the accounts receivable process to have this many components involved in a smaller type of organization, we may have less controls, and we want to basically be able to consider what types of controls are going to be necessary, all companies should have some degree of control, even if we don't have a couple employees, we want to have some degree of control. The question is, what's the appropriate level of controls with regard to the size and format and industry of the industry?