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Revenue and Receipts cycle - Coggle Diagram
Revenue and Receipts cycle
Credit
sales
Functions
The ordering
function
Documentation:
Customer order
Internal sales order (ISO)
Price list
Credit application form
Credit bureau information
The dispatch
function
Documentation:
Picking slip
Delivery note
Back order note
List of deliveries
The invoice
function
Documentation:
Sales invoice
Price lists
The revenue
recording function
Documentation:
Invoice
Sales journal
Debtors ledger
General ledger
The credit
management
function
Documentation:
All records kept in the
cycle are relevant
Age analysis
Monthly statement
Credit bureau information
Receipt from debtors
Functions
Basic controls
Controls over cash
Controls over bank account
Documentation in terms of bank
Cash register reading;
Cash advance documents;
Cash summaries;
Receipts;
Physical cash counts.
Documentation in terms of cash
Cancelled cheques;
Cheque requisitions;
Deposit slips;
Bank statements;
Bank confirmation letter;
Cash book;
Bank reconciliation
Lapping/Rolling
The theft of one customers money and then covered up by other customers money, altering the accounts receivables. This fraud can go on, multiplying the transactions until fraudulent is caught or the person responsible for this is changed.
Kiting
The creation of fake accounts to alter the account balances to avoid the detection of fraud.
Sales adjustments
Documentation:
Goods returned vouchers
Credit note returns and
allowances journals
Debtors journal
General ledger
Control
objectives
Occurrence/Validity;
Authorisation;
Completeness;
Accuracy;
Recording;
Classification;
Cut off.
Substantive testing
designed to detect material
misstatement
Substantive tests consist of:
• tests of detail of classes of transactions, account balances and disclosures, and
• substantive analytical procedures.
Weakness
Recomendations
Risk