UNIT 4: SUMMARY
Credit Sales
Functions
Documents
Ordering Function
Dispatch Function
Invoicing Function
Revenue Recording Function
Credit Management Function
Customer order
ISO
Price list
Credit application form
Credit bureau information
Receipts From Debtors
Functions
Basic Controls
Controls Over Cash
Controls Over Bank Account
Documents
Cancelled cheques
Cheque requisitions
Deposit slips
Bank statements
Bank confirmation letter
Cash book
Bank reconciliation
Cash register reading
Cash advance documents
Cash summaries
Receipts
Physical cash counts
Payments To Creditors/
Payables
Functions
Control Goods Returned
By Customers
Documents
Goods returned vouchers
Credit note returns and allowances journals
Debtors journal
General ledger
Controls
Weaknesses and Risks
An organisation will be faced with risks when the organisation has a weak internal control environment (weaknesses)
Example
Musa, the company's secretary, writes customer's
orders on any piece of paper she can find in her school bag.
Weakness: Musa writes down the order on any paper
she can find in her school bag.
Risk: The page might get lost and the order will then
be lost.
Internal Controls
Refer to the control activities that the organisation should
implement to ensure they achieve the desired objectives
E.g. the organisation will implement internal controls that
should be adhered to with regards to the authorisation of a
credit sale.
Objectives
Occurrence/Validity
Authorisation
Completeness
Accuracy
Recording
Classification
Cut-off
Substantive Testing
Substantive Testing
Rights
Existence
Accuracy, valuation and allocation
Completeness
Classification
Substantive Procedures
Classification
Completeness
Cut-off
Presentation
Accuracy
Occurrence
Presentation