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Chapter 6: Revenue System - Coggle Diagram
Chapter 6: Revenue System
Ordering:
Key risk - poor credit customer
Key control - authorizing credit terms and ensuring matching order with production order and GDN
Goods are taken
from customer are
unable to pay
Controls
Authorising of credit terms
Authorising for change in customer data
Only accept one have no credit terms
Test of controls
Cf references are onbtained to all customers
Cf all receivable acc authorised by senior
Examine order for evidence of credit approval
review customer bal to their credit limit
Order from customer
who unlikely to pay
for a long time
Controls
Only accept one have no credit problems
Discount policy for early settlement
Tests of controls
Cf orders accepted from who within credit terms n limits
Examine orders for evidence pf credit approval
Compare bal to credit limits
Review discount policy n authorising email to
Order may not be recorded
=> not fulfilled
=> lost customers
Segregation of duties:
credit control, invoicing and despatching
Sequential numbering orders to check completeness
Matching order with production ord and GDN
dealing with cus queiries
Tests of controls
observe segregation
inspect preprinted ord form
cf ord being matched
review file of ord unmatched
Order accepted
at wrong price
Controls
Standard price list
Discount authorising
Tests of control
review standard price list
tracing email to discount cus
Despatch and invoicing:
Key risk - despatch but no invoice
Key control - matching GDR w/ invoice
Goods despatch but
not invoice
Controls
GDN preprint, sequential number then review
Agree of GDN to ord and invoice
Matching invoice w/ ord and GDR
Regular review
Tests
Test nummerical GDN => check missing
Test nummerical invoices
Goods desptached
but not record
=> lost to business
Controls
Supervison of warehouse
ensure GDN accompanies all goods out inspected
prenumber GDN and check sequence
updated record
regularly count to identify good missing
Tests
observation
test numerical sequence of despatch note
review record of inventory count
Wrong goods despatch
Control
agree goods and GDN to cus
check for condition bf despatch
cus sign when receive
Tests
review cus correspondence
review GDNs for evidence of check back to sale ord
Invoice w/ incorrect prices
Controls
Authorisng change of cus data
change of address on writing
invoice check back to GDN and price list
Tests
check sp docu
recalculate invoice
Invoice for goods not supplied
Controls: invoice raised only when have GDN
Tests
observation and enquiries staff
review cus correspondence
Credit note wrongly issue to cus
Controls
credit note managed by appropriated person
check for sequencially numbered credit note
tests: check credit note w/ sp docu
Goods return not record
controls
standard goods returned note
condition check bf return in stock
Tests: review record of inventory count
and investigate problems
Recording
Wrong cus acc
updated for received
controls
prepare
send out cus statement
retain cus remittance advise
tests
review samples of cus statement
check samples of sale from
invoice to indi cus statement
sale record in
wrong period
controls
review GDN around end year
=> ensure sale recorded in correct ord
tests
reperform client review
potential irrecoverable
debt not identified
controls
review age of receivables, investigate old debts
analytical review of receivables day
tests:
analytical review of ageing of receivables bal
debt wrongly writtenoff
controls: w-off debt must
be authorised
tests: review w-off debt to
ensure sp by authorising mail
credit note not record
controls: sequencially numbered
and agreed to underlying rec
tests: review credit note
Cash collection
Cash receive not record
controls
segregatoion of duties: responsible for reciept invoice
cash record in receipt form
2 people opening mail
tests
observation
check accurancy of receipt form
check receipt form and back to bank state
obsevation of opening mail
cash received not banked
controls
daily banking check
compare daily in-slip to daily rec of cash received
bank reconciliation
surprise check cash count
store cash safely
check mail when cash received
tests
review sample of paying in-slip,
bank reconcile, outcome of count, mail
observation