Revenue Cycle Flashcards
What are inherent risks with revenue?
1) Is the rev real?
- Is it recognized prematurely
- Is it fraudulent?
2) Are receivables collectible?
- Estimated the collectibility
3) Customer returns and allowances?
- Estimate returns and allowances, especially for new tech
Who are relevant stakeholders in this cycle
Customers
Outbound logistic providers
What are important rev cycle forms?
Bill of lading- the action of loading a ship with cargo (specify terms of shipment)
Sales order - document order, specifics of order
Credit check files- granting or denial of credit
Aged trial balance- Receivables and give evidence of collectability
Picking list- Items pulled from warehouse
Packing list- contents to be shipped
Customer invoice- client’s bill
Remittance advice- help match payment to invoice
Customer statement (monthly)- Document orders and payments
What are revenue cycle risk?
Sales issues- incomplete or inaccurate customer orders
Fake sales- or sales inconsistent with policy
Writing off receivables- segregation of duties. someone who is authorized to write-off the accounts
What are controls revenue?
keep sales and receivables separate
Matching pick ticket, to packing list, and sales invoices
T/F: Pricing can be very complicated?
TRUE- one of the roles of an auditor is the verify the accuracy of pricing used.
What are controls over shipping errors?
Online shipping systems that check quantities shipped; bar code scanners and radio frequency identification tags to record picking and shipping
application controls- completeness and field checks
What are controls for stealing cash?
Segregation of duties
Controls:
- Don’t receive cash policy- only credit card
- Have multiple people involved in opening mail together
- Remittance data sent to A/R clerk, while cash and checks are sent to cashier
- Prompt documentation of money received
- Reconcile total credits to A/R
- Sending remittance list to independent party
- Monthly statement to customer
- Cash register that automatically record cash received
