6 - Revenue systems

Question 1

What are the 4 stages of the revenue system?

Answer 1

Receipt of customer order (Order form)
Dispatch of goods to the customer (Delivery note)
Invoice the customer (Invoice)
Receipt of payment from the customer

Question 2

What controls do you have for receipt of customer order?

Answer 2

Pre-numbered sequential standardised order forms to ensure orders not lost. Logic is that sequentially numbered means tracked and traced. Standardised means we get all the relevant details needed to make sure the order happens.
Credit checks are completed on new and existing customers to prevent bad debts
Credit limits set (and reviewed regularly) to minimise impact of bad debts.
Should be a system that tells you the goods are available to dispatch.

Question 3

What controls do you have for Dispatch of goods to customers?

Answer 3

Pre-numbered sequential goods dispatch notes (GDN) created as goods leave the warehouse to identify what was sent. Customers could sign a copy to acknowledge receipt of goods.
Checks on quality and quantity of good prior to dispatch to prevent later disputes

Question 4

What controls do you have for Invoicing the customer?

Answer 4

Creation of a sequential pre-numbered sales invoice to help ensure completeness.
Sales invoice matched to GDN to confirm that the units sent match to the order form to ensure the correct invoicing.

Between this step and the last, you should send out statements to customers to remind them to pay.

Question 5

What controls do you have for receipt of payment from the customer?

Answer 5

Match the funds received against the invoice being paid. This will leave only unpaid invoices on the system. This is good as you will know exactly what money has to come in.
Record and bank any cash and cheques promptly to detect and prevent misappropriation

Question 6

What are control objectives? And examples.

Answer 6

It is the aim or goal or intention of the IC. For example, what it is trying to ensure and what risk it is trying to prevent.

For the sales system:
Ensure sales are only made to credit worthy customers
Ensure orders can be fulfilled before accepted
Ensure invoicing is correct
Ensure the sale is recorded in the correct period

The word ensure tends for it to be a control objective not a control