Nobody cheers when audit season rolls around… except me.
While collection agencies groan and repossession vendors brace for impact, I’m over here reviewing contractual requirements and queuing up spreadsheets to test results. And the creditors? They don’t exactly relish the role of audit police either. But here’s the truth: it’s not about catching someone doing something wrong—it’s about preventing wrong from happening at all.
Whether a creditor makes up 1% or 99% of your volume, the expectations don’t change. Regulatory requirements don’t scale with placement volume, and neither does reputational risk. Every third-party relationship gets scrutiny—because it has to.
Here’s Where It Falls Apart
The biggest audit failures don’t come from willful neglect—they come from misunderstanding what’s actually required. That’s especially true when it comes to testing.
Some common traps:
- “We only test if the creditor requires it.” That’s a risky strategy. Most regulators and creditors expect proactive monitoring. Waiting to be told what to test? That’s how you end up with findings.
- “We do a random sample.” Okay—but what’s in the sample? Is it representative of all clients and all requirements? If 40% of your placements come from one creditor and they’re not in the sample, is that really random—or just incomplete?
- “We test generally, not specifically.” That’s where compliance gaps hide. Every creditor contract likely has some unique provisions. If you’re not reviewing contracts regularly and building tests around those specifics, you’re leaving landmines all over your audit trail.
A Better Approach
- Test Everything—Not Just What’s Requested
Build your audit program to exceed creditor expectations. Even if a creditor doesn’t demand testing, do it anyway. If regulators ask tomorrow, you’ll be ready. - Know What’s in the Contract
Contracts aren’t set-it-and-forget-it documents. Review them regularly—at least annually—and map requirements into your audit plan. If you find something new or forgotten, build a test for it. - Quantify Your Sampling
Random samples are only meaningful if they represent the entire population. Know what percentage of your total placements are in the sample and make sure you’re hitting a cross-section of creditors, services, and risk levels. - Treat Every Audit as a Learning Opportunity
Be prepared to explain why something was—or wasn’t—tested. Auditors’ questions can reveal blind spots in your process. Use their feedback to identify and close gaps, especially those highlighted by creditor-specific audit requirements.
Be Your Own Auditor
Audit prep doesn’t have to be painful. When you design your internal testing like you’re the one doing the audit, you’re in control. You find issues before anyone else does—and you get to fix them on your terms.
Butt seriously, better testing isn’t just good compliance—it’s good business.
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Author: Bev Evancic
Bev.Evancic@ResourceManagement.com
Bev Evancic is a Senior Vice President at Resource Management Services, Inc. Prior to employment at RMS, Bev worked as the Collection and Recovery Manager at AT&T Universal Card, Citi, and Federated Department Stores. Bev started in the collection industry as a collector at an upscale clothing store in Cincinnati, Ohio. As a returned check and private label credit card collector, Bev gained a basic understanding of the collection industry that has not changed with the introduction of regulations. Her collection philosophy begins with the idea that businesses and customers benefit from preserving the customer relationship. First, collectors need to attempt to contact customers when it is convenient for the customer to discuss his/her financial condition and willingness/ability to pay. Second, you never collect money by intimidating or threatening customers. Third, businesses must make sure the debt is valid.
She has managed all phases of collection and recovery operations, including automated dialer units, bankruptcy, and legal units, skip tracing units, internal collections, outside collection agency networks, and Consumer Credit Counseling. As a Consultant for Resource Management Services, Inc., Bev has spearheaded collection and recovery best practices reviews for many top credit grantors. Her articles on dialer operations, agency management and bankruptcy best practices have been widely publicized.
She is well known and regarded as a specialty expert in the areas of: Repossession, Bankruptcy, Estate, Litigation, as well as Pre- and Post- Charge-off. Prior to joining Resource Management Services, Inc. in 1995, Bev managed the Recovery Department for AT&T Universal Card Services where she developed the bankruptcy, probate, internal and litigation processes.
She is the author of “Recovery Management: Collecting the Uncollectible Account.
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