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Unit 4 - Revenue and Receipts Cycle - Coggle Diagram
Unit 4 - Revenue and Receipts Cycle
Receipts from debtors
Basic controls;
Different forms of cash should be kept separately &
recorded separately
Money banked as soon as possible
Controls over cash;
Cashier must balance cash on a daily basis
Every cashier should only be responsible for his own funds
Supervision over cashiers - senior/camera's
Controls over bank account.
Bank account should be reconciled monthly
a. Independent of the person that writes up the cashbook;
b. Reviewed by senior independent official.
Documentation present within receipts from debtors (
Cash
)
Cash register reading;
• Cash advance documents;
• Cash summaries;
• Receipts;
• Physical cash counts.
Documentation present within receipts from debtors (
bank
)
• Cancelled cheques;
• Cheque requisitions;
• Deposit slips;
• Bank statements;
• Bank confirmation letter;
• Cash book;
• Bank reconciliation.
Credit sales
The ordering function
When an order is received from a customer,
generate an ISO.
New customers and existing customers verification
The dispatch function
Picking slip
Once goods have been picked, a delivery notes
needs to be created
Security guard counts & compares goods to DN then sign
Customer should sign the deliver note or invoice
The invoicing function
Once the driver returns with the signed copy of a DN it is compared to the internal sales order and the invoice is generated.
The revenue recording function
Invoices must be recorded accurately and entered against correct debtor.
The credit management function
Credit application process (dealt with above)
Identification of debtor to be handed over to lawyers
3.Risks within the receipts from debtors
Kiting
Remove cash and reflect as outstanding deposit on bank reconciliation; and
Later a cheque for fictitious expenses is drawn and cheque deposited in company’s bank account – clearing outstanding deposit.
Lapping/Rolling
Misappropriation of receipts in cash from cash sales or receipts from Accounts Receivable
Sales adjustments
Documentations
Goods returned vouchers;
• Credit note returns and allowances journals;
• Debtors journal;
• General ledger.
ACTIVITES AND CONTROLS
Good returned
Adjustments
Controls
Control objectives for both the revenue and receipts cycle
Occurrence/Validity;
Authorisation;
Completeness;
Accuracy;
Recording;
Classification; and
Cut off.