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Revenue and Receipts cycle - Coggle Diagram
Revenue and Receipts cycle
Five functional areas
The invoicing function
objective of this function is to notify the customer promptly of amounts due for goods supplied
The revenue recording function
objective of this function is to record the sales made and to raise the corresponding debtor promptly
The dispatch function
objective of this function is to fill accepted orders promptly and accurately and to ensure only authorised orders are acted on
The credit management function
objective of this function is to limit the loss from bad debts and to encourage debtors to pay promptly
The ordering function
objective of this function is to record orders from customers and initiate action to fill them
Receipts from Debtors
Controls over cash
Controls over bank accounts
Basic Controls
Risks within the receipts from debtors
Lapping Rolling
a fraudulent practice that involves an employee altering accounts receivables to hide stolen cash
Kiting
the practice of covering a bad check from one bank account to another
Procedures 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
Sales adjustments
Credit note returns and allowances journals
Debtors journal
Goods returned vouchers
General ledger
Activities and controls that need to be in place for the payments to creditors/payables function
Adjustments
Discounts
Returns and corrections
Writing off bad debt
Ensure accuracy recording and authorisation
Goods Returned
Recorded on return and debtors account debited
A goods returned voucher and credit note is issued
Controls
Authorisation
Segregation of duties
Formal documentation
Monitoring & supervision