Homework: Identify the possible risks and make recommendations of applicable internal control

Case 1: REVENUE AND RECEIVABLE PROCESS SALES ORDER PROCESSING

Review and Approval Credit and Collection Staff verifies the accuracy and completeness of the Purchase Orders from customers and its supporting documents through the following: 1. For POs under cash purchases, Credit and Collection Staff compares the amount per validated deposit slip/Managers Check against the amount indicated in the PO.

2. For POs under Bank Financing, Credit and Collection Staff compares the signature per PO to the specimen signatures of bank representatives. Further, the indicated dealer net price in the PO is compared against the updated dealer net price in the Sage Business Cloud AR Module. The credit and Collection Staff reconcile control totals of orders entered for the day with the total of orders accepted by the order entry system and the results of variance investigations are reviewed and approved by the Credit and Collection Supervisor. All sales order price overrides must be approved by the Credit and Collection Manager and Finance Manager. Exception reports for invoices over a specified amount or containing unusual prices, terms, and discounts are produced by the Sage Business Cloud AR Module. Exceptions are investigated and resolved in a timely manner by management.

Performance Review Sales orders are in sequential order. The system rejects the input of a duplicate sales order number and places it into a suspense file where it can be researched, reviewed, and reentered (if necessary) on a timely basis. Any sales order entries with invalid, missing, or incomplete information are rejected for reentry or stored in a suspense file to be investigated. The Credit and Collection Department establishes relevant performance measures for the order management process and uses quantifiable controllable performance measures to monitor the order management process. Data is captured at the transaction source to automatically measure performance (such as processing time, follow-up time, and number of calls required). The Credit and Collection Manager tracks performance measures regularly and obtains an analysis of the performance measures against the desired performance goals. Corrective action plans are developed where appropriate.

Reconciliation A system-generated report is reviewed at period-end by the Finance Manager to verify that all completed deliveries have been recorded. A manual comparison is performed between invoices recorded and shipment logs at period-end to ensure that proper cut-off has been achieved. Exceptions are investigated and resolved on a timely basis.