Sample interview questions: How do you assess revenue risk within an organization?
Sample answer:
Assessing Revenue Risk
1. Establish a Framework for Risk Identification and Assessment:
- Define revenue recognition principles and accounting policies.
- Categorize revenue streams based on transaction types and industry best practices.
- Identify potential risk areas within each revenue category.
2. Perform Risk Assessment Procedures:
- Review contracts, invoices, and other revenue-generating documents for completeness and accuracy.
- Test internal controls related to revenue recognition, billing, and collection.
- Conduct analytical reviews of revenue trends, customer performance, and market conditions.
3. Evaluate Risk Factors:
- Industry Risk: Assess industry-specific factors that may impact revenue recognition, such as regulatory changes, competitive pressures, or seasonality.
- Contractual Risk: Review contract terms and conditions, particularly regarding revenue timing, delivery obligations, and potential revenue adjustments.
- Customer Risk: Assess customer creditworthiness, payment history, and potential for disputes or defaults.
- Operational Risk: Evaluate the efficiency and effectiveness of internal processes related to revenue recognition, including approval workflows and data integrity.
4. Quantify and … Read full answer