Checklist 16

Order to Cash – Manufacturing

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
Order Customer Customer chosen is Defined process to Check whether 1. Credit Whether there
to Cash Manageme not appropriate to check the customer credit Worthiness are any
nt complete the contract worthiness and worthiness of all Supporting customers
obligations resulting approval from new credit 2. Approval for where the credit
in bad debts. marketing head is customers has customer. worthiness is
needed for finalising been evaluated deteriorated
customer. by and after the
Credit worthiness documented for contract.
process should approval.
include the following:
• Analysis of
customers’ latest
available financial
statements.
• Understanding
customers’
management and
business.
• Personal guarantee.
• Site visit.
• Reference Check.
• Evaluation of 4 C's of
Credit
Proper documents Authorised Person 1. Check the 1. Customer How many data
not taken from approves onboarding customer hard Hard file fields or critical
customer at the time of a new customer file to test points in the
of onboarding. after reviewing data Customer form customer file
input with the and other are empty or
supporting's attached required data for are not filled up
with customer form. onboarding for any reason?
Documents needed
with customer form-
• GST Certificate
• PAN card
• E-mail ID
Internal Audit Checklist

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
• Contact Details
• Bank details
• Other details as
required in Customer
KYC Form
Without necessary
documents, no
customer is
onboarded.
Inaccurate/ 1. Authorised person 1. Check that 1. Supporting
Incomplete updation approves onboarding the information documents
of customer master of a new customer so entered is 2. Approvals
after reviewing the reviewed by
data input with the Authorised
supporting's attached person.
with customer form. 2. Check with
2. Recorded changes the supporting
to the customer documents that
master file are the information
compared to has been
authorized source completely &
documents to ensure accurately
that they were input entered.
accurately.
3. Customer master
file data is
periodically reviewed
by management for
accuracy and
ongoing pertinence.
Risk of inadequate Every employee is 1. Check the Declarations by
screening viz. an mandated to inform employee the employees.
employee being a concerned division declarations  Check whether
customer. head/ Superior where requirements of
conflict of interest code of conduct
exists. and Companies
Act, 2013 are
Employees are fulfilled.
required to certify
compliance with the

144
 Order to Cash – Manufacturing

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
policy on an annual
basis.
Unauthorised Customer master can 1. Check that 1. Approvals for Check whether
modifications/alterati be updatedthe person addition / log of changes
ons made to (modifications /
making the alteration is available.
customer master. Alterations) only with
addition /
the approval of
alteration is
authorised person. authorised to do
so
Also, the access to 2. Check
make modification / approval as per
alteration to the approval matrix.
customer master is
restricted to
personnel authorised
as per approval
matrix.
Inactive/ fictitious Customer with no 1. Check the 1. Customer
customers are not transactions for a customer master Ledgers
blocked. period specified as for blocked 2. Customer
per organisation customers. Master
policy are blocked in
ERP/Accounting
Package for further
sales with approval
of authorised person
Unauthorised Block customer 1. Check list of 1. Customer
reopening of accounts can only be blocked Master
customer blocked opened again after customer 2. Approval logs
earlier. taking approval as account
per approval matrix. reopened
2. Verify proper
approvals have
been taken.
Annual Annual Targets are An annual target is Check whether Approved Sales
Target not prepared, no developed for annual sales Budget
proper planning defining the sales for budget is
leading to loss of each year. Targets prepared and
revenue. are duly approved by approved as per

145
Internal Audit Checklist

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
the authorised the authority
personnel matrix
management/ Board.
Annual targets are Every month, Review Minutes Minutes of
not being achieved. meeting of Division of Meeting meetings
head with Marketing
team is held to keep
the annual sales
target on track.
At period end,
reasons are
identified for
variances in actual
sales with budgeted
sales and same is
considered while
formulating plan for
the next year.
Order Product prices The pricing of each Check approved Price List
Manageme catalogue is not product is decided by price list
nt approved by the Management with Verify changes
authorized person. Division heads made are
considering costing properly
and other factors and authorized.
the same is defined
in the ERP/
Accounting Package.
Also, the prices are
reviewed by the
management on a
regular basis, and
changed, if required.
Unauthorized Authorised personnel Check whether Quotations
quotations send to prepare and record the quotations
customer. the quotation in the are approved
ERP/ Accounting properly as per
Package, the the authority
quotation is approved matrix
by Approving
authority as per

146
 Order to Cash – Manufacturing

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
authority matrix and
shared to customer.
Unauthorized Data validation is Check whether Price List
discount allowed to done in the ERP/ the pricing of Sales orders
the customers Accounting Package sales orders is Approvals for
so that the personnel according to the discount
inputting days cannot price list.
enter the price below Verify discounts
than allowed limit have been
Further Approval as approved from
per approval matrix as per approval
is required to quote a matrix.
rate/price to
customer.
Quotations not Customer inquiry for Verify quotations Quotations
shared with customer quotations is input by are being with Listing
within time sales team in time specified as
ERP/Accounting per Organisation
Package. Delayed policy.
quotation is time
flagged in
ERP/Accounting
Package. Quotations
as made are required
to be, approved and
shared to customer
within 2 Days of
receipt of inquiry of
quotations.

Signed purchase The sales executive Check proper Purchase order/

order/agreement not shall ask for the supporting agreement
obtained and sales customer to share attached with received from
process started the approved sales order customer
purchase order/ raised.
agreement, or in Also, check the
absence of P.O, he sale order is not
shall prepare the issued until
Performa invoice PO/agreement/
after onboarding of Performa

147
Internal Audit Checklist

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
customer into invoice not
ERP/Accounting received.
Package and get it
signed & stamped by
the customer.
Further, work is not
started until sales
order is made.
Sales order is not Sales orders are to Check sales Authority Matrix
entered or incorrectly be reviewed (with orders are Approvals for
entered in the system respective purchase approved as per sales order
with respect to rate, order/agreement) authority matrix.
quantities & other and approved as per
terms or duplicates authority matrix.
orders are entered. Further, Invoices are
linked to sales order,
invoices can’t be
issued without sales
order.
Sales Specifications are Check sales Sales order
order/agreement mandatory field in orders are
does not prescribe the sales order and prepared with all
the correct technical cannot be specifications
specifications of circumvented (in necessary and
goods required ERP/Accounting match the sale
resulting in Package). order
procurement of Sales agreement is specification
incorrect goods approved by with customer's
approving authority purchase order
after proper review.
Delay in approving The sales order Verify sales Authority Matrix
sales order created should be orders are Organisation
approved within time approved within policy
specified as per time limit Approvals for
organisation policy. specified. sales order
Unapproved sales
order are time
flagged on
dashboard of
approving authority.

148
 Order to Cash – Manufacturing

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
Unauthorized Request for Check sales Authority Matrix
modification/cancella modification/cancella orders are Approvals for
tion of sales tion of sales modified/ sales order
order/agreement order/agreement is cancelled as per
raised in ERP/ authority matrix
Accounting Package,
and after approval as
per authority matrix,
the request is closed.
No process of In case, sales order Check sales Listing for Sale
closing/ blocking the has not been orders are orders
old sale order in the completed within closed after time
ERP automatically time agreed, the limit specified in
sales order is closed. sales order has
Customer has to passed.
apply to the
Organisation for new
order for the
unexpired quantity.
Credit Credit policy is not in Approved credit Check whether Approved Credit
Manageme place / Unapproved policy is in place and credit policy is Policy
nt credit policy is all the customers are formulated
formulised given credit as per
the policy only. Same
is also mentioned on
invoice.
Unauthorized Credit limits are Check changes Authority Matrix
changes in credit defined in in credit limit are Approved Credit
limit, period and ERP/Accounting authorised as Limit
terms of a customers Package, any per authority
modifications made matrix
are to be approved
as per authority
matrix
Unauthorized credit Credit Limit Matrix Check credit Approved Credit
allowed to have been defined limit matrix is Limit Matrix
customers. for allowing credit prepared and
period to the clients approved
in Credit Policy.

149
Internal Audit Checklist

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
Delivery order has Credit Limits are Check whether Data for credit
been generated by linked to customer credit limits are given to
the system and the account in ERP/ breached during customer during
customers trade Accounting Package, the year. the year
debts exceed their for exceeding credit If exceeded,
credit terms/ limits. limits, prior approval Check whether
has to be taken as prior approvals
per authority matrix were taken.
Order Quality of the goods 1. Person Check reports of Quality Reports
Fulfilment delivered not in line responsible shall quality team
with the requirement regularly follow-up issued during
of the customer with the production the year.
team for the purpose
of quality of goods to
be delivered.
2. Before loading of
material, the quality
team and sales team
shall check the
quality of material on
a random basis and
shall share the
quality inspection
report to the
dispatch/document
team.
Delivery not made to Sales order validity is Check whether Outward Register
customer within time mentioned in the sale sales are made E-Way Bails
order at the time of to customer Sale Orders
creation of sale order within time
and the same is specified in
monitored by the sales order.
authorized personnel
to make all deliveries
timely.
Customers do not 1) Delivery challan to Check whether Acknowledgemen Customer
receive dispatched be taken from acknowledgeme t from customer. confirmation
products leading to transporter. nts has been Delivery Challan. obtained where
customer dispute 2) Goods receipt received from Invoice. Acknowledgem
note / material customers and ent from

150
 Order to Cash – Manufacturing

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
receipt note as delivery challans customer is not
confirmation is taken are available. available
from respective
customer through
mail.
Order Goods are a. Items are Verify dispatch Dispatch
Shipping dispatched more dispatched on the order/packing order/packing list
than sales order basis of sales order list with sales Invoice
quantity issued by sales and order Sale order
marketing
department.
b. Inventory
Personnel ensure
that items are not
issued more than the
sales order quantity
of customer.
c. Goods are loaded
in the vehicle in the
presence of security,
marketing executive,
and inventory
personnel.
Shipping is made Sale order is not Verify advances Bank Statement
without obtaining generated until have been Sale
advance payment advance is not received as per order/Agreement
received as per the sale
PO/agreement/profor agreements/sale
ma invoice. order.
Also check that
no sale order is
generated until
advance
received.
Invoicing & dispatch Invoice and dispatch Reconcile Invoice
documents are documents are Invoices with E- E-way bills
generated but generated after the way bills
products are not dispatch team has
dispatched loaded the goods on
vehicle.

151
Internal Audit Checklist

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
Invoice generated Based on marketing Match Invoice Invoice
and goods team communication, generated with Sale order
dispatched are not in packaging list is sales order
line with customer prepared, and goods issued and
order are identified and PO/agreement
made ready for to customer
dispatch by stores
team. Goods
dispatched note is
prepared by stores in
charge and goods
are loaded in vehicle
in presence of stores
in charge & security
in charge. Based on
packaging list and
goods dispatch note,
invoicing is done.
Delivery is made Invoice is linked with check that Invoice
without sale order sales order. Invoices have Sale order
Inventory team been linked to
issues the inventory sales order
to dispatch team
after recovering
approved sales order
form sales team.
Dispatched Goods Security in charge Verify Dispatch Invoice
have not been input/ checks outward goods have Outward register
incorrectly input in registers are updated input in outward
outward register before dispatch of register
maintained at goods from gate.
factory/company gate Security supervisor
on regular intervals
checks registers are
updated timely and
correctly.
Customer Dispatch is done Goods are not exiting Match the Outward register
Invoicing without issuing the factory gate outward register Dispatch register
invoice. before the issue of with invoice and invoices
Invoice and other dispatch

152
 Order to Cash – Manufacturing

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
dispatch documents. register.
Invoice is not as per Dispatch team and Verify Invoices Invoices
dispatch Security in charge issued during Dispatch
order/packaging list. scrutinises the the year with order/packaging
dispatch their respective list
order/packaging list dispatch
with invoice and order/packaging
ensure both are in list
line.
Invoicing is not in Predefined format for Check the Invoices
line with statutory invoice has been format of Invoice Refer respective
requirements made in is in line with law
ERP/Accounting statutory
Package after requirements
approval of
authorised
personnel. The same
is regularly reviewed
by FP&A team.
Invoice generated Invoices are Check correct Invoices
with incorrect prepared by statutory details Refer respective
statutory details (Like authorised person, are filled for law
HSN, Place of and invoice is invoices issued
supply, GST Rate, reviewed and during the year
etc.) approved by the
authorised signatory
Invoices raised on Invoices are linked Verify invoices Invoice
unauthorized/incorre with sales order are matching Sale order
ct rates. (agreed earlier with with sales order
the customer). Rates linked to it
and other terms are
pre-specified in
invoices as per sales
order.
Invoices not For every sale, Verify Invoice
generated and delay packaging list, goods Packaging list/ Packaging list/
in generating the dispatch note & Goods dispatch Goods dispatch
invoice. invoice is created. note/order with Data
Without packaging Invoice issued

153
Internal Audit Checklist

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
list & invoice, goods during the Year.
loaded vehicle is not
allowed to exit
factory gate.
E-way bill generated Dispatch team and Reconcile Invoice
not in line (incorrect Security in charge Invoices with E- E-way bills
item, rates, quantity, scrutinises the way bills
etc.) with the invoice dispatch documents
issued. like invoice, e-way
bill, etc and ensure
all are matching with
one-another.
Cash sales made not Invoice/cash receipts Check invoices Invoices
recorded/ under are to be issued from is issued from Cash Receipts
recorded. ERP/Accounting ERP and Reconciliation
Package for cash monthly
sales and monthly reconciliation is
reconciliation is made or not
made of invoice
generated with cash
deposit by authorised
personnel.
Cash received not Cash received Check cash is Bank Deposit
deposited in bank should be deposited deposited within Slips
within time as per at the branch office time as per the Cash
Organisation policy. as per the Organisation Reconciliations
Organisation policy. policy and
Responsible reconciliation is
Personnel should done for cash
reconcile it with receipt at
ERP/Accounting branch.
Package receipts Verify cash
and issue received for
acknowledge-ment. sales during
Responsible year has been
Personnel should deposited in
deposit the cash in bank.
bank daily basis/
next working day.

154
 Order to Cash – Manufacturing

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
Sales Policy has not been Approved policy has Check sales Sales Return and
Return and formulated for Sales been defined for return and Refund policy
Refund return and refund. Sales Return and refund policy
Refund.
Sales return request Authorised matrix Check proper Approval for
accepted without has been defined for approvals have sales return
proper approvals approval of sales been taken for
return request approving sales
return request.
Unauthorised/ 1) Approval as per Check approvals Credit Notes
improper Credit approval matrix is for Credit notes register/ledger
notes is issued taken for issue of the issued during
credit note through the year
mail/ERP/Accounting
Package by
personnel
responsible.
2) After approval, the
credit notes are
prepared by
personnel
responsible and
shared to customer.
Sales returns are 1) After arrival of Check Report Quality team
incorrectly recorded vehicle at issued by quality report
(Quantities, Rate warehouse/factory, team for MRN for
etc.) or accounted goods are checked returned goods, Returned Goods
without physically by quality team. MRN generated Approval as per
receiving goods Report is issued and by Inventory approval matrix.
goods are forwarded team and
to inventory team. approval of
2) Inventory team Division head for
inputs the goods in Sales Return.
register and raises
material receipt note.
3) After issue of MRN
and approval from
Division head, sales
return entry is

155
Internal Audit Checklist

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
passed in books.
Refund of sales Bank account is Check approval Approval
return made to updated in the received as per
incorrect customer ERP/accounting approval matrix
package.
Before refund,
approval as taken
per the approval
matrix.
Accounts No policy for Account statements Check whether Accounts
Receivable periodical customer for all customers has accounts Statements/Bala
balance been obtained on statement are nce confirmations
reconciliation / quarterly basis and obtained as per from customers
Incorrect customer reconciliation is Organisation
balance reflected in prepared by person policy.
books of accounts responsible. Further,
balance
confirmations are
obtained from all
customers on yearly
basis.
Identified Identified deviations Check whether Accounts
discrepancies during are reconciled by there is any Statements/Bala
reconciliation with responsible discrepancy nce confirmations
customer are not accounting personnel between from customers
adjusted correctly in and reviewed by customer Customer
the books of approving authority. statements and Ledgers
accounts Adjustment is Organisation Approvals for
entered in ledgers. adjusting entries
Accounting Package Check identified
after approved by discrepancy are
approving authority. resolved and
adjusted in
necessary books
after approvals
as per authority
matrix
Revenue is recorded Revenue for Goods Check Revenue
in books for goods sent on approval is conditions as Recognition

156
 Order to Cash – Manufacturing

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
sent on approval, but recorded when mentioned in Policy
approval not received i) The goods have Organisation Data for Goods
from customers. been formally policy are Sent on
accepted by the satisfied before Approval.
buyer, or booking revenue Book entry
ii) The buyer has for "Goods Sent
done an act adopting on Approval".
the transaction, or
iii) The time period
for rejection has
elapsed or where no
time has been fixed,
a reasonable time
has elapsed.
Provision for bad & Organisation has Check whether Policy for
doubtful debt is not defined policy for policy is provisions.
made or made using creation of provision formulated for Customer
incomplete and for doubtful debts. recording of Ageing.
inaccurate data or Ageing for debtors is doubtful debts Approvals for
not correctly prepared. Provision and ageing is recording
accounted for in the for doubtful debts is prepared provision for
books of accounts approved by Chief regularly. doubtful debts
Financial Officer & Verify necessary
provision is entered approvals as per
in accounting authority matrix
package by have been
responsible received for
accounting personnel recording
and approved by provision for
approving authority doubtful debts.
to take legal advice
for collecting the
dues and filing suits.
Debtors written off The Accounts Check the bad Bad debts ledger
without approval receivable team debts in the Trail
share the list of ERP with the mail/Supporting's
customers who have share list by the for bad debts by
not made the authorised authorised
payment to Division person. person

157
Internal Audit Checklist

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
heads and CFO.
Decision is taken to
written off the
balance and the
same is shared to
authorised personnel
to pass the entry in
the ERP/Accounting
Package.
Payment Regular delay in Monthly aging is Check that Aging
Collections collecting payments extracted from regular follow up Follow up mail
from customers. ERP/Accounting is done with
Package by customer whose
marketing team and payment is due
regular follow up is
done with the
customer whose
payment is due.
Cheque received but 1) Cheques received Check the Receipts data
not deposited in are collected by the deposit slip with Deposit slip
Bank marketing team and entry in the ERP
forwarded to
accounts
department, and
cheque is deposited
in bank on the same
day or next working
day.
2) Monitoring of
cheque deposit being
done on regular
basis.
Cheque deposited in After receiving the Check Bank Ledgers
bank but not cheque from the organisation Bank Statements
accounted marketing team, books are Reconciliation
entry is made in matching with
ERP/Accounting bank
Package on the statements, and
same day or next daily bank

158
 Order to Cash – Manufacturing

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
working day. BRS is reconciliation
also prepared and statements are
monitored on daily being made
basis,
Collections are Collection is Check bank Bank
recorded incorrectly recorded in reconciliations Reconciliation
in the books with ERP/Accounting are prepared, Statements
respect to amount, Package and and appropriate
period or customer approved by journal entries
account. authorised person are passed as
after verification of per
supporting reconciliation
document. Further,
reconciliation is
performed for bank
ledger & bank
statement and
deviations are
recorded accordingly.
Incorrect calculation Interest on defaulting Check whether Customer Ageing
is done for the companies is to be the sales Invoice Receipts
interest accrued on calculated on the proceeds have data
the outstanding basis of a fixed been realised interest working
receivable balance. percentage as per within the time
approved policy and limit as per the
same is to be as per credit
approved by the given to
authorised person. customer.
Obtain collection
date & invoicing
date for all
invoice and
verify interest
has been
charged on
defaulting
companies
Reporting Revenue is not Organisation has Ensure that an Revenue
and Data recognized as per defined revenue appropriate, Recognition
Manageme applicable AS / recognition policy in consistent

159
Internal Audit Checklist

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
nt organisation policy compliance with revenue Policy
applicable recognition
accounting standard. policy is applied
at the year end.
Ensure that the
policy adopted is
in line with
generally
accepted
accounting
principles.
Compare the
Organization’s
policy for
accounting sales
with the
significant
accounting
policies
mentioned in the
Notes to the
Accounts.
Transactions have Monthly sales Check Revenue Sales Data
been recorded in invoices, GST is recorded in GST Returns
incorrect period. returns, e-way bill & correct period Invoice Data
sales data as per and apply cut-off
Reconciliation
accounting package procedures for
are reconciled by testing.
person responsible,
to ensure no invoice
is omitted to be
recorded and
recorded in the
current financial
period/ year.
Reconciliation are
approved by
authorised person.
Fictitious /duplicate All invoices are to be Check that Approved
sales are recorded in authorised/ approved invoices are invoices

160
 Order to Cash – Manufacturing

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
the books of from Authorised approved from Ledger of sale
accounts. Signatory. authorised
Further all entries are signatory and
approved as per entries are
approval matrix. approved as per
approval matrix.
Sales transactions Sales entry is passed Scrutinise sales Sales Schedule
are not properly by person ledgers on Sale leger
classified in accounts responsible, and it is overall basis,
approved by and check sales
authorised person. are recorded in
correct ledgers.
Benefits for export Export incentive Check trail Working of export
sales not availed/ working is prepared, mail/supporting' incentive
under availed by the and it is reviewed by s of approval as Trail mail
Organisation. authorised person. per approval
matrix.
Export sales are All export sales are Check export Export sale
recorded at incorrect recorded at same sale made are ledger
foreign exchange day prevailing CBEC recorded at Invoice
rate. website rate. Sales rates as CBEC rates
entry is passed as specified by
per accounting accounting
manual. manual
Accounting for Separate expense Check Books of Account
exempt sales is done and revenue ledgers accounting for
incorrectly in books are made related to exempt sale and
of account. exempt sales for taxable sale in
compliance with books
applicable tax laws
Customer No policy has been Approved Policy for 1. Obtain policy Customer
Evaluation formed for evaluation evaluation of of customer Evaluation Policy
of customer. customer has been evaluation
formed.
Customer The Customer Check whether Customer
evaluations are not Evaluation is done as customer Evaluation
being performed per policy. Marketing evaluations are forms/report
regularly. and Finance team is being
responsible for doing performed, and

161
Internal Audit Checklist

Proces Sub- Risk Description Control Test Performed Attributes Data analytics
s process tested performed
the customer approved
evaluation. Based on customer list is
the same and updated as per
subsequent the evaluations
discussions with the
approving
authorities, Sales
depart-ment revises
the approved
customer list and
block customers as
per evaluations list.
Customer No policy has been Approved Policy for 1. Obtain policy Customer Policy
Complaints for handling of handling customer of handling
customer complaints. complaints has been customer
formed. complaints
Policy made for Authorised levels are 1. Check for Customer Policy
handling of customer formulated for compliance with Complaint Log
complaints not handling a customer the policy for
complied. complaint, regular handling
monitoring is done to customer
ensure customer complaints.
complaints are
handled as per policy
by authorised
personnel.
Timely redressal of Authorised person as 1. Check status Complaint Log
customer complaints per policy handles of customer
not done. customer complaints complaints.
and take appropriate 2. Report
action. complaints
Regular monitoring is which have not
done for status of been resolved in
customer complaints time specified as
by authorised per Organisation
personnel as per policy
company policy.

162