INHERENT LIMITATION Definition

INHERENT LIMITATION is whether the potential effectiveness of an entity's internal control is subject to inherent limitations, e.g., human fallibility, collusion, and management override.

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WRITE-UP SERVICE is the provisioning of all reporting requirements of bookkeeping and accounting services. The following is a non-exhaustive list of reporting services provided:

• 1099s report preparation for subcontractors
• Bank account reconciliation
• Check coding
• Fixed asset schedules
• Maintenance of general ledger
• Payroll deposit calculations
• Payroll tax filings
• Personal property tax returns
• Preparation of internal financial statements

COLLECTION PERIOD (Period End) is used to appraise accounts receivable (AR). This ratio measures the length of time it takes to convert your average sales into cash. This measurement defines the relationship between accounts receivable and cash flow. A longer average collection period requires a higher investment in accounts receivable. A higher investment in accounts receivable means less cash is available to cover cash outflows, such as paying bills. NOTE: Comparing the two COLLECTION PERIOD ratios (Period Average and Period End) suggests the direction in which AR collections are moving, thereby giving an indication as to potential impacts to cash flow. Formula: AR (current) / (Net Revenue / 365)

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