Control deficiency
Credit limits are set by sales ledger clerks
why
affect
if too high, irrecoverable debts
too low, loss of customers
sales ledger clerks not senior (not competent)
recommendation
credit limits should be set by a senior member
regularly review by a responsible official
test of control
test who??
sample of new customers => review authorisation of the credit limit, ensure this was performe by a responsible official
enquire sales ledger clerks as to who can set credit limits
Customer oders are given a number based on sales person's own identification number
why?
not sequential
affect?
identify missing orders
monitor dispatched orders in a timely manner
loss of customer goodwill
ko check đc occurence của sales
recommendation
sales orders = sequentially numbered
ko check đc completeness và accuracy của sales invoice
test of control
reperform the control by undertaking a sequence check of sales orders
discuss any gaps with sales ordering staff
Finance clerk take charge of several elements of cash receipts systems
why
segregation of duty
post bank transfer receipts
update sales ledger
checker: perform bank reconcilation
increased fraud
recommendation
split the role
test of control (who??)
review the file of complete bank reconciliations to identify who prepare them?
review the log of IDs of individuals who have posted bank receipts and updated the sales ledger to assess whether these are different individuals
discuss with the financial controller which members of staff undertake the roles of processing of bank receipts and updating of cashbook and sales ledger
regularly undertake sequence check
examine a sample of sales orders to ensure proper credit approval by the appropriate senior staff
who?
identify errors in a timely basis
Credit limits not regularly reviewed
why
over a period of time, customer's credit limits change
too high => irrecoverable debts
too low => loss of sales
recommendation
review order history and payment records on a regular basis
TOC
khách order mà ko check với inventory
why?
loss of sales
loss of customer goodwill
damange reputation
recommend
website include interface into inventory system
to check inv order
if out of stock, waiting time
TOC
test data to process orders for items not currently held in inv
flag orders out of stock and indicate approximate waiting time
Lack of customer signatures
why
falsely claim that they have not received their goods
despatch twice
Recommend
remind all local couriers that customer signatures must be obtained
no payment if no signatures
TOC
Sample of despatches and review customer signature
sales orders not fulfilled in a timely manner
why
recommend
goods despatched matched with sales orders, flagged as fulfilled
flag outstanding sales orders past a predetermined period
report reviewed by a responsible official
TOC
review report of outstanding sales orders to check the time period between sales orders and despatch
is it significant?
yes, discuss the reason
sample of sales orders, compare the date of order with goods despatch date => ?? in a acceptable predetermined period?
sales discount set by sales team
why?
boost team, too high => an unacceptable gross margin
recommend
team members => grant sales discounts to a set limit
sales discount above => set by sales directors
review regularly
TOC
discuss the process of granting discount
review sales discount report for evidence of review by sales director
review the credit limit report to ensure it is regularly reviewed