internal controls - Sales System - phases risks and controls

customer places order

Key Risks: orders from bad debtors; incorrect prices; unfulfillable orders

Key Controls: credit checks for new customers; approved price list; pre numbered sequentially numbered sales orders.

order fulfilled and despatched

key risks: without valid order: wrong quantity/ quality despatched

key controls: match Goods Despatched Note (GDN) to sales order; customer signs for goods; two step verification before despatch.

Customer Invoiced

key risks: invoice raised for goods not despatched; duplicate invoices; incorrect amounts

risk controls: match invoice to GDN sequentially pre-numbered invoices; stamp GDN as invoiced.

customer pays

key risks: cash not received for all invoices; theft of receipts

key controls: bank reconciliations: aged debtor reports reviewed clearly; cash locked in safe

goods returned

key risks; credit note issued without goods being returned: incorrect credit amount

key controls: goods return note raised on receipt, credit note matched to return note and original invoice.

credit note issued

key risks: duplicate credit notes; credits for wrong amounts

key controls: credit notes sequentially numbered; approved by senior before issue