5 Mantras of Accounting Assurance for Telecom Operators to optimise profit growth
Numerous organisations use accounting assurance services to verify the validity of their financial data. Businesses typically also use assurance services for risk assessment, information systems reliability, e-commerce, healthcare and business performance. In telecom, accountants often use this autonomous professional program to examine financial documents and improve the quality of the data contained in those records.
What is assurance in accounting?
Assurance services concentrate on overlooking the procedures, operations and management of a company to ensure it is operating with the necessary precision. Assurance operates on past data from enterprise reports to analyze and improve the quality of information which in turn helped individuals make informed decisions. The most standard assurance benefit is the assessment of financial reports for accounting departments. Assurance services are not only used for analyzing financial systems but also systems in other departments of business like internal controls or IT systems.
Most telcos need to use accounting assurance because the law demands them to, while other domains use these services for voluntary, regulatory or compliance grounds. The use of assurance services in telcos is necessary to navigate complexities, risks and opportunities by proactively managing and monitoring risks associated with financial decision-making that affect partner networks or third-party relationships. Businesses find that assurance services help achieve greater financial performance, create sustainable revenue growth and provide competitive techniques for differentiation.
Why is Accounting assurance needed?
Accounting Assurance is important to mitigate the cause of revenue leakage such as inaccurate treatment of revenue streams, incorrect revenue accounting, reporting errors etc. If accounting assurance services are not applied it leads to multiple challenges like:
- Lack of knowledge of accounting procedures received from controlling departments resulting in delays in accounting the revenue
- Inaccurate design of business logic and general logistic systems across systems like Charging / Billing / Data Warehouse causing errors in data records
- The lack of management resulted in poor visibility of the revenue numbers reported
- Inconsistent updates or faulty maintenance of existing statements resulting in mistakes in revenue accounting across revenue streams
- Inaccurate booking of Invoices and the inefficient process by operators for desperate voucher sales
- Ineffective tracking of the voucher and SIM sales caused by the absence of a voucher control system
Inaccurate mapping of invoices to general logistics for revenue analysis
What are the components of Accounting Assurance?
Here are 5 elements that build up accounting assurance services:
- Three-team relationship: This contains the liable party who organizes the data, the practitioner who acquires the information and the application users who make informed decisions based on the assurance’s output.
- Subject matter: There must be a clear subject of issue for assurance services. Generally, this is the balance sheet, income statement or statement of cash flow.
- Benchmark criteria: In the case of mandated criteria, such as the International Financial Reporting Standards, the assurance specialists review the subject concern.
- Criteria evidence: The assurance professional conducts this by forming performance reports of the subject matter with accurate and high-quality data.
- Assurance report: This is the reported result of the assurance service that explains and finalizes the subject concern.
What are the processes involved in Telecom Accounting Assurance?
Telecom operators are often trying to expand significantly to bring in optimised profits since it is a very competitive business domain. With reference to this, accounting assurance has evolved from its function as a business regulator to a business achiever.
Revenue accounting is a vital area of CSP business. Here, operators encounter tough challenges when it comes to estimating revenue across earned and unearned values, compliance, and recording of financial data. Telcos also find it hard to monitor leakages within order to cash bookings, voucher generation (electronic and physical), starter kits and bundled offers, pre-provisioning invoicing of channels etc., leading to mistakes, delayed processes, inaccuracies in customer data records or overstatement/understatement of revenue gathered.
When recorded, prepaid and post-paid service validations provide crucial insights into possible areas of revenue leakages within a corporation’s accounting activities.
Here are a few steps involved in the accounting assurance process :
- End-to-end process verification
- Stock management review
- Distribution process review
- Invoicing process validation
- Account receivables review
- Independent method analysis
- Report and transaction analysis
- Configuration validation
- Billable versus billed validation
- Invoice to ERP action
- Unbilled revenue validation
- Financial reporting
Existing revenue accounting processes have in-built tools to determine discrepancies that might cause revenue leakages. These processes are based on operator policies, review of payments by subscribers, and real revenue collected through the charging systems. Detailed comparisons between distinct metrics involved can forewarn revenue assurance teams about probable leakages, thereby reducing conflicts in the earned and unearned revenue accounting across services.
Accounting Assurance as a service can improve the quality and transparency of information and reduce the likelihood of problems occurring from incorrect data. Assurance processes can be regulatory or compliance-based. Their function is to ensure that a business is following guidelines, rules and policy and provide both internal and external assurance for financial accounts.
Accounting experts are qualified independent performers who can tackle such services and verify processes are streamlined. Reducing risk enables intended users to confidently make informed decisions. Thus, assurance guarantees better decision-making for users, such as investors and analysts.
Also, assurance services follow up on their procedures by testing the validity of past data within the business cycle. The most popular assurance service is financial statement verification, but they incorporate a wide range of other complex assessments as well.
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Roshan Pandey is currently working with Subex’s Product Marketing team. He is a postgraduate in management from Symbiosis Institute of Digital and Telecom Management with Marketing as his majors. He has work experience across Marketing and sales in the IT and Telecom industry. He is a passionate public speaker and enjoys reading about technology and marketing.