One Time Customer Allowed or forbidden? 1816



  • Hi,
    We’ve been told that, as part of SOX we must not use our ‘One time Customer’ account - that being project customers that don’t have an account so pay by EFT or credit card. Apparantly, and I quote, ‘One of the requirements for SOX is that any sale made requires an agreement between us and the customer, because of this requirement the following accounts will be closed on November 1st’
    Any advice?
    Questions:
    i) Do we not enter into an agreement purely through purchase order/sales order confirmation?
    ii) Do we really need a credit application form to be completed even for EFT/Credit Card payments?
    Sales of this kind equate to about USD1m (over 3 years), have fantastic margin, allows for excellant cash flow and is what the customer wants (customer focus.)
    Surely SOX is not this crazy?
    Any help would beb very much appreciated.



  • I think your auditors query is largely driven by the KYC perspective. A clause in your purchase / sale agreement that customers should provide official identification documentation is something you should put across to your auditors after analysing if it is technically feasible.
    If it is otherwise it may be useful asking for your auditors point of view on the law of contract which states that all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful considera­tion and with a lawful object, and are not expressly declared to be void.
    However I find the comment rather weird 8O…How would your auditors react to the sales at Walmart or Texco which are largely retail driven…Surely they dont expect these Companies to not cater to customers who pay by credit card…



  • Hi,
    ‘One of the requirements for SOX is that any sale made requires an agreement between us and the customer, because of this requirement the following accounts will be closed on November 1st’

    This is NOT a direct Sox requirement. SOx does not mandate anything specific at the process level.
    However, it may be something that someone has put in place indirectly because of SOx e.g. your company may have put in a process or control that it thinks it needs to comply with SOx. This is where ‘business engagement’ is important.



  • We have had some grief from our ext auditors in regards to a similar matter, where they did not think that terms and conditions on the back of invoices was sufficien to ensure that they are read by customers
    when it comes to terms and conditions we have advised them that we do not consider it to be of significant risk as the legal liability to comply will fall onto the customer.



  • You must be kidding. Are you using one of the big 4 ? Can I ask which one?
    I totally agree with your answer. We have terms written on the back of our purchase orders as well.



  • KPMG.
    They want Terms and conditions on order acknowledgement forms despite the fact that customers rarely return these, and, as mentioned earlier, we already include them on the back of our invoices.
    We may add them to our website and note this at the end of our emails as a comprimise…



  • Hi Guys,
    Sorry for the delay in responding. Thanks very much for the in-sight - very much appreciated. I think the summary of this is that it’s not a direct requirement of SOX but could be a recomendation of the auditor/our internal people. I always thought that you entered into a contract once you swapped the pieces of paper - i.e. purchase order followed by sales order confirmation. However, like the man said, you don’t have to fill out a credit application form every time you buy something so this seems a little crazy to say the least.
    Thanks again.


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