The primary objective of a telco’s revenue assurance (RA) function is to maximize revenue by implementing required processes, practices, and procedures, and to ensure that controls are in place to plug any potential or actual revenue leakage. Revenue leaks usually happen through Business Support System (BSS) process gaps, system gaps or exposure to fraud. RA is part of the overall financial picture of the organization, and however strong the RA operations are, they should still be audited.
RA audits are performed to:
- provide assurance that controls are effective and adequate;
- ensure there are established governance processes; and
- verify RA functions are operating as intended.
RA teams rarely welcome their audit. I remember a famous Latin phrase “Quis custodiet ipsos custodes?” which is literally translated as “Who will guard the guards themselves?” and also rendered as “Who will watch the watchmen?” In this case the answer would be the telco’s statutory or internal auditors.
If we consider the RA team’s function is to save money, then their auditors should confirm if RA is saving money. This requires checking whether the RA team is functioning as expected. It is important to make sure that the RA team is not advertently or inadvertently costing money. Financial audits themselves cost the operator money and time, and an RA department that is not able to readily provide or pass audit checks imposes additional cost to the telco. This cost rises if the duration of the audit needs to be extended.
Auditors are not usually experts in the field of revenue assurance. Therefore, only a team of RA specialists can audit RA operations. The auditor relies on revenue figures covered by the RA audit. The RA audit depends on the IT audit in turn. Systems and tools used by RA operations must be reliable, which is why the IT audit underpins the RA audit.
These dependencies lead to a chain of audits from IT to RA and through to the final financial audit. The relations between them must be handled through careful planning and orchestration. Telco audits require multiple specializations and face many challenges. I would like to draw on recent experiences to highlight the challenges to auditing RA, and how technology could ease the audit process and make it more robust.
The year-end revenue assurance audit of a tier 1 operator achieved a clean bill of health, but a lot of effort was required to reach this conclusion. The starting point was:
- the RA team was mature and possessed well-defined roles and responsibilities;
- their analysts were knowledgeable about their respective workstreams; and
- there were adequate reporting and monitoring tools in place, including end-to-end call simulation.
Even though the RA function was mature, they lacked something that resulted in the extension of the audit timeline and increase to the overall cost of the audit. RA staff also had to spend more time with the auditors and this affected their regular operations.
The audit covered all contracts and agreements but those relating to interconnect, VAS, breakage policy, etc, were not readily accessible from the RA tool. When the contracts were retrieved from another department, they were not signed or were not the latest version. The RA tool had the capability to archive files for future retrieval but the RA team had neither the documentation or the knowhow to retrieve archived data. Asking the vendor to do this would trigger a formal change request, leading to increased costs. I could also safely assume that the tool lacked the AI/ML capability that might have helped the review process.
It is important that the RA tool is scoped to support the inevitable audit of RA. This includes having the functionality to retrieve data pertaining to the entire financial year. I believe this can be provided using RA solutions built on big data technology and supported by adequate training and documentation. The tool must possess the capability to manage digital assets, including the use of AI to extract data from PDF or other text formats so that auditors can review the figures used by RA to those found in contracts, agreements and policies. The tool must also integrate with other systems such as the voucher management system and customer service system, ensuring revenue figures reconcile and determining whether manual adjustments are performed as per policy.
Audits seek to deliver good governance, transparency and a reliable bottom line. For these goals to be achieved, revenue assurance must be ready for audit.