Internal Contol Revenue Stystem

Question 1

Ordering

Answer 1

Risks

1) Goods sold to customer with poor credit rating
2) Orders misrecorded
3) Orders go unfulfilled
4) Orders accepted at wrong price

Controls

1) credit checks, check credit limits before accepting, changes to customers credit limits must be authorised , review of credit limits by senior staff
2) preprinted standard order forms, confirm orders with customers
3) match customer order to GDNs, investigate unmatched orders, customer order forms preprinted and sequentially numbered and periodically reviewed for completeness
4) standard price list, discounts must be authorised by appropriate levels of management

Test of Controls:

1) review credit checks performed for new customers , review of customer balances compared to credit limits, review changes to customer credit limits for authorisation
2) inspect preprinted order forms
3) review file orders for unmatched order forms , investigate unmatched orders over a certain age
4) review standard price list