Revenue Controls Flashcards
formula = how important the risk is
magnitude x likelihood of a risk materialising
the revenue process : ordering
how the customer orders from a company
the revenue process : dispatch and invoicing
how the customer is asked for payment by a company and gets the goods
the revenue process : recording
did the company record the sale and put it in the right place in their accounts
the revenue process : cash collection
is the company actuallly collecting the cash they are owed
dispatch and invoiving : what we want
make sure all dispatches are recorded , correctly invoiced and invoices relate to the product and credit notes are only given for valid reasons
dispatch and invoicing : risks
- goods may be dispatched but not invoiced for
- they may be dispatch and not recorded
- invoices might be raised in error with customers
- invoives may be wrongly cancelled by credit notes
controls put in place within a business
- authorisation for dispatch
- examination and recording of dispatched goods
- matching records between firm and customer
- prenumbering dispatch records
- condition and recording or returned goods
- signature of dispatch records by customers
- correct preparation of invoices (price lists etc)
- credit notes authorised and numbered
- matching sales invoices to dispatch records
- regularly reveiwing records
what could we test
- verify the details of trade sales or goods dispatch records
- verifying sales against inventory records
- verify non-routine sales against records/approvals
- verify credit notes with supporting evidence
- test numerical sequences of despatch records, invoices and credit notes inquiring into missing numbers
- check that dispatches on special terms were authorised
recording : what we want
- they want to record invoiced sales, credit notes and sales properly.
- potential irrecoverable recievables are identified
- cut off is correctly applied
recording : risks
- invoiced sales may not be correctly recorded
- credit notes not correctly recorded
- debts may be incluuded in recievables that are not collectable
recording : potential controls
Segregation of duties
• Recording of sales invoices sequences and control over spoiltinvoices
• Matching cash receipts with invoices
• Retention of customer remittance advices
• Cut off procedures
• Separate recording of sales returns, price adjustments etc
• Regular preparation of trade receivables statements and regular checking
• Safeguarding of trade receivables statements so they cannotbe changed
• Receive and follow up of overdue accounts
• Authorisation of writing off irrecoverable receivables
• Analytical review of receivables and profit margins
recording : test of controls
Receivables ledger
• Check entries against invoices and credit notes
• Check additions, cross casts and balances carried down
• Note and enquire into contra entries
• Scrutinise accounts to see if credit limits be observed
• Check trade receivables statements are prepared and sent ourregularly
• Check that overdue accounts are followed up
• Check that all irrecoverable receivables written off have been authorised by management
cash collection : what company wants
- all money is recieved, recorded and banked
cash collection : risks
money is being recevied and not recorded or banked
cash collectio : controls
Recording the arrival of receipt by posts
• Safeguards to prevent interception of mail
• Appointment of responsible person to supervise the mail
• Protection of cash and cheques
• Amounts received listed when the post opened
• Post stamped with the date of receipt
• Recording of cash sales and collections
• Restriction on receipt of ash to cashiers only or sales representatives
• Evidence of receipt of cash- serialy numbered receipt forms or cashregisters with sealed till rolls
• Emptying of cash offices and registers
• Agreement of cash collections with till roll, bankings and sales records
• Investigation of cash surpluses and shortages
Recording controls
- prompt maintenance of records
- limitation of duties of recieving cashiers
- giving and recording reciepts
Banking controls
- daily bankings
- make up and comparison of paying slips against receipt records
- banking of receipt
safeguarding of cash and bank accounts
Restrictions on opening new accounts
•Limitations on cash floats held
•Restrictions on payments out of cash received
•Restrictions on assets to cash registers and offices
•Independent checks on cash floats
•Custody of cash outside office hours
•Custody of supply and issue of cheques
•Preparation of cheques restricted and safeguards over mechanically signed cheques
•Restrictions on blank cheques
•Safeguarding of IOUs cash in transit
•Insurance arrangements
