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    AIS Chapter 12

    Uploaded by

    Omar Hosny

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    AIS Chapter 12

    Uploaded by

    Omar Hosny
    77 views18 pages

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    © © All Rights Reserved

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    PPTX, PDF, TXT or read online from Scribd

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    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    77 views18 pages

    AIS Chapter 12

    Uploaded by

    Omar Hosny

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 18

    Chapter 12

    The Revenue Cycle: Sales to Cash Collections


    12-1
    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall
    Learning Objectives

     Describe the basic business activities and related information


    processing operations performed in the revenue cycle.

     Discuss the key decisions that need to be made in the revenue cycle,
    and identify the information needed to make those decisions.

     Identify major threats in the revenue cycle, and evaluate the


    adequacy of various control procedures for dealing with those
    threats.

    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-2


    The Revenue Cycle

    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-3


    The Revenue Cycle

     Provides goods and services to customers

     Collects cash in payment for those sales

     Primary Objective:
     Provide the right product
     In the right place
     At the right time for the right price

    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-4


    Revenue Cycle Activities

    1. Sales order entry

    2. Shipping

    3. Billing

    4. Cash collections

    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-5


    General Revenue Cycle Threats

     Inaccurate or invalid master data

     Unauthorized disclosure of sensitive information

     Loss or destruction of master data

     Poor performance

    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-6


    General Revenue Cycle Controls

     Data processing integrity controls

     Restriction of access to master data

     Review of all changes to master data

     Access controls

     Encryption

     Backup and disaster recovery procedures

     Managerial reports

    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-7


    Sales Order Entry

    1. Take order

    2. Check and approve credit

    3. Check inventory availability

    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-8


    Sales Order Threats

     Incomplete/inaccurate orders

     Invalid orders

     Uncollectible accounts

     Stockouts or excess inventory

     Loss of customers

    Copyright 2012 © Pearson Education, Inc. publishing as Prentice Hall 12-9


    Sales Order Entry Controls

     Data entry edit controls (see  Perpetual inventory control


    Chapter 10) system

     Restriction of access to master  Use of bar-codes or RFID


    data
     Training
     Digital signatures or written
    signatures  Periodic physical counts of
    inventory
     Credit limits
     Sales forecasts and activity
     Specific authorization to approve reports
    sales to new customers or sales
    that exceed a customer’s credit  CRM systems, self-help Web
    limit sites, and proper evaluation of
    customer service ratings
     Aging of accounts receivable
    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-10
    Shipping

    1. Picking and packing the order

    2. Shipping the order

    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-11


    Shipping Threats

     Picking the wrong items or the wrong quantity

     Theft of inventory

     Shipping errors (delay or failure to ship, wrong quantities, wrong


    items, wrong addresses, duplication)

    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-12


    Shipping Controls

     Bar-code and RFID technology  Reconciliation of shipping


    documents with sales orders,
     Reconciliation of picking lists to picking lists, and packing slips
    sales order details
     Use RFID systems to identify
     Restriction of physical access to delays
    inventory
     Data entry via bar-code scanners
     Documentation of all inventory and RFID
    transfers
     Data entry edit controls (if
     RFID and bar-code technology shipping data entered on
    terminals)
     Periodic physical counts of
    inventory and reconciliation to  Configuration of ERP system to
    recorded quantities prevent duplicate shipments

    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-13


    Billing

    1. Invoicing

    2. Updating accounts receivable

    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-14


    Billing Threats

     Failure to bill

     Billing errors

     Posting errors in accounts receivable

     Inaccurate or invalid credit memos

    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-15


    Billing Controls
     Separation of billing and shipping  Data entry controls
    functions
     Reconciliation of batch totals
     Periodic reconciliation of invoices
    with sales orders, picking tickets,
     Mailing of monthly statements to
    and shipping documents customers

     Reconciliation of subsidiary
     Configuration of system to
    accounts to general ledger
    automatically enter pricing data
     Segregation of duties of credit memo
     Restriction of access to pricing authorization from both sales order
    master data entry and customer account
    maintenance
     Data entry edit controls
     Configuration of system to block
     Reconciliation of shipping credit memos unless there is either
    documents (picking tickets, bills of corresponding documentation of
    lading, and packing list) to sales return of damaged goods or specific
    orders authorization by management
    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-16
    Cash Collections Threats

    1. Theft of cash

    2. Cash flow problems

    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-17


    Cash Collection Controls
     Separation of cash handling function from accounts receivable and credit functions

     Regular reconciliation of bank account with recorded amounts by someone independent of


    cash collections procedures

     Use of EFT, FEDI, and lockboxes to minimize handling of customer payments by employees

     Prompt, restrictive endorsement of all customer checks

     Having two people open all mail likely to contain customer payments

     Use of cash registers

     Daily deposit of all cash receipts

     Lockbox arrangements, EFT, or credit cards

     Discounts for prompt payment by customers

     Cash flow budgets

    Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 12-18

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