Chapter 14: The Revenue Cycle: Sales to Cash Collections

Threats to the Revenue Cycle

Inaccurate or invalid master data

Unauthorized disclosure of sensitive information

Loss or destruction of data

Controls for Inaccurate or invalid (master) data

Access controls (e.g., authentication, authorization)

Data entry control, if entered manually

Periodic review of master data

Controls for Unauthorized disclosure of sensitive information

Access controls

Encryption

Tokenization of personal information

Employee training

Controls for Loss or destruction of data

Regular backups

Disaster recovery procedures

Sales Order Entry Process threats

Incomplete/inaccurate orders

Invalid Orders

Uncollectible AR

Controls for Incomplete/ inaccurate orders

ERP systems

Completeness checks

Data entery controls

Controls for invalid orders

Customer signatures and digital signatures

Controls for Uncollectible account receivables

formal credit checks

Monitoring the AR aging report

Segregation of duties for credit approval from sales staff

Shipping process major threats

Theft of inventory

Shipping errors (e.g., fail to ship the goods, ship wrong items or wrong quantities, ship to wrong address, duplication of shipment)

Theft of Inventory Controls

Inventory Checks

Pickers, Shippers and record keeping segregated

Inventory security

Shipping errors Controls

Compare and reconcile shipping documents with sales orders

Data entry VIA barcode and RFID

Billing Process Threats

Failure to bill customer after shipping the goods

Billing Errors

Posting errors in AR

Controls for Failure to bill customer after shipping the goods

segregate shipping and billing functions

ERP systems need to constantly compare sales invoices, to picking report and to shipping documents

Controls for Billing errors

checking master file for pricing mistakes

restricting employee access to employees

Compare reconcile quatitites listed on packing slips on the sales orders.

Segregation of Duties

Custody of assets (e.g., handles/deposits cash payments from customers)

Authorization of transactions (e.g., approve returns and issue credit memos)

Recording of transactions (e.g., post remittances to customer accounts)

Reconciling records with existing assets (e.g., conduct bank reconciliation)