Summary
Summary Auditing - Transaction Cycles
- Institution
- University Of South Africa (Unisa)
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REVENUE & RECEIPTS CYCLEOrder Department
Function Source Document & Who Documents
*Receiving customer orders *Manual system - orders received should be entered manually onto a preprinted,sequenced, multicopy,ISO *Customer order
*confirm customer’s * Order clerk will take the ISO to the credit management department to have the ISO signed (authorised) *Internal sales order
acc. is “up to date” * If an order is received from a non-account holder, the credit management department will check customer’s *Price lists
*Authorising the sale creditworthiness,setting credit terms & limits. *Credit application
*instructing warehouse to select *A copy of the ISO will be delivered to the warehouse to act as the “picking slip". *Debtors ledger
items ordered to be despatched *A copy of the ISO will be filed in the order department in numerical sequence &a copy will be sent to acc. Dep.
Risk Control Activity
*Order may be accepted from a *Record all orders on sequentially numbered internal sales orders.
non-account holder. * No orders to be accepted if the customer is not an approved customer, Order clerk will check approved customer list.
*Orders may not be acted upon * Attach customer order to ISO & have someone else cross check detail.
timeously or at all, resulting in *For phone orders, order clerk to:
loss of sales & customer goodwill. - request customer’s account number - confirm all order details, including delivery address & price of goods
*Inaccurate or incomplete - request customer’s order reference
order details may be recorded, * Order clerk to sign all ISOs to indicate performance of control activities.
resulting in incorrect deliveries * ISOs are sequence checked regularly & matched to delivery notes to identify any orders that have not been acted upon. (completeness)
, returns & customer dissatis. *Before processing the order, checks should be carried out by credit controller :
*Sale made to a customer who *The customer has not supplied fictitious details *customer’s credit status is satisfactory
is not creditworthy *ISOs (picking slip) to be authorised by signature of the credit controller before being sent to the warehouse.
*Where the order is from a prospective customer, credit application procedures must be conducted before the order is filled:
*Credit application form must request the customer to provide banking details, trade references, income and expenditure details
*Credit controller must follow up by contacting trade references & credit bureaus & assessing customer liquidity
*Terms & limits must be set by the credit controller & approved by the financial manager.
Warehouse/despatch
Function Source Document & Who
*Processing the order *Required to select the goods to be sent to the customer in terms of the ISO/picking slip
*Despatch *Control removal of goods from warehouse to the despatch area for delivery to, or collection by, the customer
(i.e. the goods should be signed out of the custody section of the warehouse and into the despatch section).
Documents *Manual system - ISO/picking slip sent to warehouse will be given to a warehouse employee to select goods listed.
*Picking slip *Employee will tick off the goods picked & mark clearly any items that are not available
*Delivery note *A warehouse clerk will then manually complete apreprinted, multipart, sequenced delivery note, detailing goods
*Back-order note * Once DN is complete, goods are moved to despatch area with supporting doc. to be checked, boxed or packaged
*List of deliviries *Despatch clerk will sign doc. (copy of delivery note/picking slip) to acknowledge transfer of goods into his custody.
*Goods despatched to customer are accompanied by 2 copies of DN signed by customer, 1 retained by customer & other returned to the co.
* Delivery lists will be compiled & goods loaded onto the delivery vehicle under supervision.
*The driver will acknowledge taking custody of the goods by signing the delivery list.
Risk Control Activity
*Valid ISO/picking slips may *Picker to initial the picking slip for each item picked & identify on the picking slip, items that cannot be supplied (OOS)
not be acted upon. *Supervisory checks carried out by warehouse foreman to ensure all goods picked are supported by signed picking slips.
*Goods may be picked from inv. *Warehouse clerk to:
for fictitious/unauthorised sales. - check goods picked to picking slip - prepare delivery note from picking slip
*Incor. items & quantities picked. - prepare back-order note from the picking slip and cross-reference both documents
, Risk Control Activity
*Inaccurate & incomplete DN *send copy of the back-order note to order clerk to enable the order clerk to notify customer
*“Out of stock” items may not be *Send copy of the back-order note to the buying department.
identified on picking slip. *When inv. becomes available, order clerk confirm customer still requires the goods & make out an ISO to initiate the sale.
*Customer not notified of OOS *DN & picking slips to be matched and filed numerically. Unmatched picking slips to be followed up 'to determine if goods have been picked.
items resulting in loss of sale * On receipt of the goods, picking slip & DN from the warehouse, the despatch clerk should:
& customer goodwill. - Check quantities & description of goods against the authorised picking slip & delivery note
*Theft may be facilitated - Sign picking slip & DN to acknowledge receipt of goods - retain 2 copies of DN & return signed picking slips to warehouse
*Inc. Goods/quantity despatched *Goods picked should be checked to PS & DN as they are packed into a box for delivery.
*Delivery to wrong customer. *Address on box is checked against delivery address on the doc. & box sealed immediately.
*Customers deny receiving goods. * Despatch clerk prepare a two-part list of deliveries. List is matched to DN & physical goods loaded onto vehicle.
*Goods released from warehouse *Delivery staff supervise loading truck & sign a copy of delivery list to acknowledge receipt of DN & corresponding goods:
are never despatched. - driver to retain one copy of delivery list, & DN - Despatch clerk to retain signed copy of delivery list.
*Gate controls check goods to be delivered appear on the delivery list & are supported by DN. Both DNs date stamped by gate control
*On delivery customer sign both DN, retain one copy and return the other copy with the driver.
Invoicing
Function Source Document & Who
*Sending invoices *Acc. employees collect supporting doc. for the sale
Documents (ISO & the copy of the delivery note signed by the customer) They will check all the details of sale & create an invoice.
*Sales invoices *Preprinted, multicopy, sequenced invoice will be made out manually, taking the details from the supporting documentation.
*Price lists * Debtor details, pricing, discounts, casts & extensions & VAT will be checked,
*Copy of the invoice will be sent to the customer.
Risk Control Activity
*Goods despatched not invoiced. *Copy of the ISO is held in numerical order in a temp. file in the “invoicing section”(acc. Dep.).
*Invoices inaccurately prepared * As signed DNs are received, they are matched to their ISO & filed sequentially by DN no.
/misstated (prices, quantities, *ISOs remaining on the temp. file should be investigated frequently & regularly.
descrip., discounts,VAT). *File of matched DN is sequence tested & gaps investigated.
*The invoice clerk should:
- compare details on the ISO & DN - prepare a numerically sequenced invoice & cross-reference it to DN/customer order.
- check prices quoted to customer, & entered on the ISO, against official price lists & discount schedules
* Second employee (supervisor) to check & sign invoice after checking:
-prices, extensions, casts - discount & VAT - customer details.
Recording Sales & raising the debtor
Function Source Document & Who
* Creating records of sales & *Manual system - copy invoices for the period are sent to the designated accounting clerk to write invoices numerically in the sales journal.
debtors * Before total sales is posted to the general ledger & individual sales are posted to debtors ledger, another staff member will check
Documents sequence of invoices in the sales journal, follow up on any missing numbers, &check the accuracy of the amounts entered in
Invoices & GL the sales journal against the invoices themselves.
Sales journal & debtors ledger *Amounts will then be posted (transferred) to the respective ledgers.
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