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    Tutorial 4 Answer

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    fadillah 256
    The document describes risks and control activities at different stages of the revenue cycle. It lists stages like receiving orders, goods dispatch, invoicing, and payment receipt. For each stage it identifies risks like customers not paying or wrong items being sent. It then provides control activities to mitigate the risks, such as checking credit history before granting it, inspecting returned items, restricting invoice changes to authorized personnel, and separating cash handling from accounting records.

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    Tutorial 4 Answer

    Uploaded by

    fadillah 256
    21 views3 pages
    The document describes risks and control activities at different stages of the revenue cycle. It lists stages like receiving orders, goods dispatch, invoicing, and payment receipt. For each stage it identifies risks like customers not paying or wrong items being sent. It then provides control activities to mitigate the risks, such as checking credit history before granting it, inspecting returned items, restricting invoice changes to authorized personnel, and separating cash handling from accounting records.

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    The document describes risks and control activities at different stages of the revenue cycle. It lists stages like receiving orders, goods dispatch, invoicing, and payment receipt. For each stage it identifies risks like customers not paying or wrong items being sent. It then provides control activities to mitigate the risks, such as checking credit history before granting it, inspecting returned items, restricting invoice changes to authorized personnel, and separating cash handling from accounting records.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    21 views3 pages

    Tutorial 4 Answer

    Uploaded by

    fadillah 256
    The document describes risks and control activities at different stages of the revenue cycle. It lists stages like receiving orders, goods dispatch, invoicing, and payment receipt. For each stage it identifies risks like customers not paying or wrong items being sent. It then provides control activities to mitigate the risks, such as checking credit history before granting it, inspecting returned items, restricting invoice changes to authorized personnel, and separating cash handling from accounting records.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 3

    Tutorial 4 - activity

    Revenue cycle - Risk and control activity

    Stages in cycle Risks Control Activity


    Received order from customer Customer unlikely to pay Grants/denies credit based on
    the customer’s credit history
    contained in the credit history
    file
    Product not available An authorization for the
    customer to receive notice
    about whether the delay of
    the product or about the
    cancellation of the product
    Goods dispatched Customer does not receive Check whether its true or not
    delivery before sending another
    product again or reimburse
    them
    Wrong items sent When items are return,
    receiving employee will
    inspect and prepare return slip
    the returned goods and return
    slip sent to warehouse for
    restock
    Invoice raised Wrong items invoiced Only authorized personnel can
    override and correct it
    Errors in posting to Receivable Only authorized personnel can
    Control account override and correct it
    Payment received Payment is stolen by Create a supervision of
    employees employees to serves as a
    deterrent to dishonest acts
    Limit the access to both cash
    and the GL cash account could
    remove cash from the firm and
    adjust the cash account to
    cover the act.
    TUTORIAL CHAPTER 4

    Multiple Choice Questions

    1. B 4. B 7. D
    2. A 5. D 8. C
    3. A 6. D

    Short Answer Questions

    1. = cash receipts separate from accounting records


    = accounts receivable sub-ledger separated from general ledger

    2. Segregation of duty
    = There should be different person handling customer payments on account and another
    person handling accounts receivable ledger.

    3. = Transaction authorization should be separated from transaction processing.


    = Asset custody should be separate from asset record-keeping.
    = The organization should be so structured that the perpetration of a fraud requires
    collusion between two or more individuals

    4. In POS entire sales transaction gets completed at a single point. While revenue cycle of a
    manufacturing firm is split between sales order processing subsystem and cash receipts
    subsystem comprising of various steps.

    5. ABC Hardware

    No a) Internal Control Description b) Improvement


    Weakness
    1. No independent The accounting department clerk The accounting
    verification manually prepares an invoice and department clerk
    sends it to the customer without should check with the
    checking with the warehouse warehouse first before
    whether the warehouse can ship the prepares an invoice
    order or have available stock to ship and sends it to the
    or nat. customer
    2. No authorisation A warehouse employee picks the The warehouse
    product and sends it to the shipping employee should get
    department along with the stock authorisation first
    release upon receiving the shipping before he/she picks
    notice the product and sends
    it to the shipping
    department
    3. No Segregation of The warehouse clerk updates the There should be
    duties inventory records on the warehouse different person who
    PC and files the sales order in the updates the inventory
    warehouse. The clerk also prepares a records on the
    hard copy of the inventory summary warehouse PC and files
    and sends it to the general ledger the sales order in the
    department warehouse.

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