Revenue and receipts cycle - Coggle Diagram
Revenue and receipts cycle
Ensure that all receipts are processed and recorded accurately.
Accounts Receivable Monitoring
Monitor and manage customer accounts to ensure timely collection of receivables.
Order Entry and Billing
Implement controls to ensure that all sales orders are entered correctly and billed appropriately.
Inventory master files – Raw mat., WIP & Finished Goods
Records detail of all inventory movements of different classes of inventory.
Daily production report
Detail of each job in process – Raw material, time and accumulated costs
Job transfer/ inventory movement sheet (Goods received note)
Document authorizing the transfer of WIP to next stage of production
Completed production report
Total costs of raw material, time, quantity of goods & overheads allocated of completed jobs.
Customer Job card (“CJC”)/ Inventory Job card (“IJC”)
Records machine & human hours for specific customer (customer card)/bulk production (inventory card)
Transfer to finished goods note
Records the transfer of manufactured goods from the production department into the finished goods stores.
Raw material issues slip
Records raw material issued to production
Picking slip and delivery notes
To select goods ordered from the stores and to assist in controlling the movements of goods once they have been sold.
Inventory Production Order
Document for bulk production
Inventory Count Sheet
Used during an inventory count.
Customer Production Order
A document produced for a specific order where the manufacture is to customer specifications
Inventory adjustment form
Sequenced documents which is used to record adjustments to inventory
Supervision and Review
Regular supervision and review of revenue records to ensure accuracy and completeness.
Segregation of Duties
Duties related to billing, collections, and accounting should be divided among different employees to prevent fraud and errors.
Rotation of Duties and Regular Leave
Periodic rotation of staff and mandatory leave policies to prevent fraud and detect errors.
Strong management oversight on revenue processes.
Regular internal audits to assess the effectiveness of revenue controls.
Sufficient Stationery Control
Controlled access to financial documents to prevent misuse.
Examination of revenue records for extraordinary items and discrepancies.
Testing Castings and Calculations
Verification of the mathematical accuracy of documents and ledger accounts
Weaknesses and risks
Physical Safeguarding Failures
Insufficient security measures in place to protect assets, including lack of surveillance or poor access control, can lead to theft or misappropriation of assets.
Revenue Recognition Errors
Incorrect application of revenue recognition principles, leading to premature or delayed revenue recording, can distort financial results and mislead stakeholders.
Segregation of Duties
Lack of proper segregation of duties among staff handling orders, billing, and receipt of payments may increase the risk of theft, fraud, and errors in the recording of revenue transactions.
Inadequate Review of Receivables
Failure to regularly review accounts receivable can result in undetected errors or fraud, such as unrecorded payments, overstatement of sales, or poor credit management.
Obsolete and Slow-Moving Inventory Risks
Inadequate monitoring of inventory turnover can result in an accumulation of obsolete or slow-moving goods, leading to potential inventory write-downs and loss of revenue.
Inadequate or missing sales documentation, such as incomplete sales orders or missing delivery notes, can lead to unrecorded revenue transactions and potential financial loss.
Documentation and Authorization
Revenue transactions should be backed by authorized documentation.
Revenue-generating assets should be adequately insured.
Limit access to financial systems to authorized personnel.
Review and Authorization
Regular review of revenue transactions and authorization for adjustments by management.