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Revenue and Receipts Cycle - Coggle Diagram
Revenue and Receipts Cycle
money/profit generating cycle in any business
revenue activities differ based on type of business
the risks and controls
Functions
credit sales
ordering function
dispatch function
invoicing function
revenue recording function
credit management function
receipts from debtors
Basic controls
Controls over cash
Controls over bank account
documentation
Cancelled cheques
Cheque requisitions
Cash book
Cash register reading
Physical cash counts
Risks within the receipts from debtors
Lapping/Rolling
Kiting
Procedure to detect Lapping/Rolling and Kiting
Positive accounts receivable confirmations
Surprise cash counts & bank reconciliations
Cash summaries compared to entries in cash receipts and cash payment records, mail registers, deposit slips
sale adjustments
Sales adjustments
documentation
Goods returned vouchers
Credit note returns and allowances journals
Debtors journal
Good returned
Adjustments
Controls
INTERNAL CONTROLS AND CONTROL OBJECTIVES IN THE REVENUE CYCLE FOR CREDIT SALES
Occurrence/Validity: All recorded credit sales are valid and supported by proper documentation.
Authorisation: All credit sales are authorised according to company policy
Completeness: All valid credit sales are recorded and nothing is left out
Accuracy: All credit sales are recorded on sales invoices at the correct quantity, price and are arithmetically correct
Accuracy: All credit sales are recorded on sales invoices at the correct quantity, price and are arithmetically correct
Recording: All credit sales invoices are recorded correctly
Classification: All sales are correctly classified according to the nature thereof.
Cut off: All sales transactions are recorded in the correct reporting period