The revenue cycle is a method of defining and maintaining the processes used for the completion of an accounting process for recording revenue generated from services or products provided by the company, which include the accounting process of tracking and recording transaction from the beginning, normally which starts from receiving an order from the customer or entering in agreement with the customer, delivering an order to customer and end with getting payment from the customer. The figure on the next page describes the different business activities of four departments, including (1) Sales Department, (2) Accounting Department, (3) Warehouse/Shipping, and (4) Mailroom. 

Required: Based on the below figure, discuss the uncontrolled risks associated with the system as currently configured? And describe the controls that need to be implemented into the system to mitigate the risks in the given scenario.

 

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Sales Department Customer Customer Order Approve credit, prepare Sales Order and Record Sale Sales Order Sales Invoice Packing slip Sales Journal Check Deposit Slip Bank Accounting Department Sales Order Sales Invoice Packing Slip Bill Customer, record CR, Update Accounts Sales Invoice Customer Check Remittance advice . Sales Order Packing Slip A AR Sub Ledger GL Accounts CR Journal Warehouse/Shipping Sales Order Sales Order Packing Slip 10-10-10 10 Pick Goods, Update Inventory. send goods to Carrier Packing Slip Carrier Inventory Sub ledger Mailroom Customer Check Remittance Advice Open mail and reconcile RA and Check Check Remittance Advice A Sales Department Customer Customer Order Approve credit, prepare Sales Order and Record Sale Sales Order Sales Invoice Packing slip Sales Journal Check Deposit Slip Bank Accounting Department Sales Order Sales Invoice Packing Slip Bill Customer, record CR, Update Accounts Sales Invoice Customer Check Remittance advice . Sales Order Packing Slip A AR Sub Ledger GL Accounts CR Journal Warehouse/Shipping Sales Order Sales Order Packing Slip 10-10-10 10 Pick Goods, Update Inventory. send goods to Carrier Packing Slip Carrier Inventory Sub ledger Mailroom Customer Check Remittance Advice Open mail and reconcile RA and Check Check Remittance Advice A

Answer rating: 100% (QA)

Uncontrolled Risks Associated with the System as Currently Configured There are several uncontrolled risks associated with the system currently config... View the full answer