Professional Documents
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Revenue Cycle
Revenue Cycle
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INTRODUCTION
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INTRODUCTION
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INTRODUCTION
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INTRODUCTION
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INTRODUCTION
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INTRODUCTION
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INTRODUCTION
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INTRODUCTION
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REVENUE CYCLE BUSINESS
ACTIVITIES
• Four basic business activities are
performed in the revenue cycle:
– Sales order entry
– Shipping
– Billing
– Cash collection
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 11 of 161
REVENUE CYCLE BUSINESS
ACTIVITIES
• Four basic business activities are
performed in the revenue cycle:
– Sales order entry
– Shipping
– Billing
– Cash collection
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 12 of 161
SALES ORDER ENTRY
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 13 of 161
Orders 1.1
Customer Take Customer
Order
Orders
Response
Inquiries
1.2
DFD for
Approve
Credit Sales Order Entry
Customer Approved
Orders
1.3
1.4 Check
Sales Order Inv. Inventory
Resp. to
Avail.
Cust. Inq.
Ware- Purchas-
Shipping Billing
house ing
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Orders 1.1
Customer Take Customer
Order
Orders
Response
Inquiries
1.2
DFD for
Approve
Credit Sales Order Entry
Customer Approved
Orders
1.3
1.4 Check
Sales Order Inv. Inventory
Resp. to
Avail.
Cust. Inq.
Ware- Purchas-
Shipping Billing
house ing
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Orders 1.1
Customer Take Customer
Order
Orders
Response
Inquiries
1.2
DFD for
Approve
Credit Sales Order Entry
Customer Approved
Orders
1.3
1.4 Check
Sales Order Inv. Inventory
Resp. to
Avail.
Cust. Inq.
Ware- Purchas-
Shipping Billing
house ing
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Orders 1.1
Customer Take Customer
Order
Orders
Response
Inquiries
1.2
DFD for
Approve
Credit Sales Order Entry
Customer Approved
Orders
1.3
1.4 Check
Sales Order Inv. Inventory
Resp. to
Avail.
Cust. Inq.
Ware- Purchas-
Shipping Billing
house ing
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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SALES ORDER ENTRY
Orders
Response
Inquiries
1.2
Approve
Credit
Customer Approved
Orders
1.3
1.4 Check
Sales Order Inv. Inventory
Resp. to
Avail.
Cust. Inq.
Ware- Purchas-
Shipping Billing
house ing
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Orders 1.1
Customer Take Customer
Order
Orders
Response
Inquiries
1.2
Approve
Credit
Customer Approved
Orders
1.3
1.4 Check
Sales Order Inv. Inventory
Resp. to
Avail.
Cust. Inq.
Ware- Purchas-
Shipping Billing
house ing
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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Orders 1.1
Customer Take Customer
Order
Orders
Response
Inquiries
1.2
Approve
Credit
Customer Approved
Orders
1.3
1.4 Check
Sales Order Inv. Inventory
Resp. to
Avail.
Cust. Inq.
Ware- Purchas-
Shipping Billing
house ing
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Orders 1.1
Customer Take Customer
Order
Orders
Response
Inquiries
1.2
Approve
Credit
Customer Approved
Orders
1.3
1.4 Check
Sales Order Inv. Inventory
Resp. to
Avail.
Cust. Inq.
Ware- Purchas-
Shipping Billing
house ing
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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Orders 1.1
Customer Take Customer
Order
Orders
Response
Inquiries
1.2
Approve
Credit
Customer Approved
Orders
1.3
1.4 Check
Sales Order Inv. Inventory
Resp. to
Avail.
Cust. Inq.
Ware- Purchas-
Shipping Billing
house ing
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Orders 1.1
Customer Take Customer
Order
Orders
Response
Inquiries
1.2
Approve
Credit
Customer Approved
Orders
1.3
1.4 Check
Sales Order Inv. Inventory
Resp. to
Avail.
Cust. Inq.
Ware- Purchas-
Shipping Billing
house ing
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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SALES ORDER ENTRY
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SALES ORDER ENTRY
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 46 of 161
REVENUE CYCLE BUSINESS
ACTIVITIES
• Four basic business activities are
performed in the revenue cycle:
– Sales order entry
– Shipping
– Billing
– Cash collection
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 47 of 161
SHIPPING
• The second basic activity in the revenue cycle is
filling customer orders and shipping the desired
merchandise.
• The process consists of two steps
– Picking and packing the order
– Shipping the order
• The warehouse department typically picks the order
• The shipping departments packs and ships the
order
• Both functions include custody of inventory and
ultimately report to the VP of Manufacturing.
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 48 of 161
Shipping
Sales Picking List 2.1
Order Pick &
Entry Pack
Goods &
Sales Packing
Order List
Sales Order
2.2
Bill of Ship Inventory
Lading & Goods
Packing Slip
Carrier
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 49 of 161
Shipping
Sales Picking List 2.1
Order Pick &
Entry Pack
Goods &
Sales Packing
Order List
Sales Order
2.2
Bill of Ship Inventory
Lading & Goods
Packing Slip
Carrier
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 50 of 161
SHIPPING
• The second basic activity in the revenue cycle is
filling customer orders and shipping the desired
merchandise.
• The process consists of two steps:
– Picking and packing the order.
– Shipping the order.
• The warehouse department typically picks the order.
• The shipping departments packs and ships the
order.
• Both functions include custody of inventory and
ultimately report to the VP of Manufacturing.
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SHIPPING
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Sales Picking List 2.1
Order Pick &
Entry Pack
Goods &
Sales Packing
Order List
Sales Order
2.2
Bill of Ship Inventory
Lading & Goods
Packing Slip
Carrier
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Sales Picking List 2.1
Order Pick &
Entry Pack
Goods &
Sales Packing
Order List
Sales Order
2.2
Bill of Ship Inventory
Lading & Goods
Packing Slip
Carrier
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 55 of 161
SHIPPING
• The second basic activity in the revenue cycle is
filling customer orders and shipping the desired
merchandise.
• The process consists of two steps:
– Picking and packing the order.
– Shipping the order.
• The warehouse department typically picks the order.
• The shipping departments packs and ships the
order.
• Both functions include custody of inventory and
ultimately report to the VP of Manufacturing.
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SHIPPING
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SHIPPING
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SHIPPING
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REVENUE CYCLE BUSINESS
ACTIVITIES
• Four basic business activities are
performed in the revenue cycle:
– Sales order entry
– Shipping
– Billing
– Cash collection
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 64 of 161
BILLING
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 65 of 161
Sales Sales Order
Order 3.1 Shipping
Entry Billing
Invoice
Sales
General
Ledger &
Rept. Sys. Customer Sales Customer
3.2
Billing and Maintain Mailroom
Accounts Accts. Remittance
Rec. List
Receivable
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Sales Sales Order
Order 3.1 Shipping
Entry Billing
Invoice
Sales
General
Ledger &
Rept. Sys. Customer Sales Customer
3.2
Billing and Maintain Mailroom
Accounts Accts. Remittance
Rec. List
Receivable
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BILLING
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BILLING
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BILLING
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BILLING
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BILLING
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Sales Sales Order
Order 3.1 Shipping
Entry Billing
Invoice
Sales
General
Ledger &
Rept. Sys. Customer Sales Customer
3.2
Maintain Mailroom
Accts. Remittance
Rec. List
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Sales Sales Order
Order 3.1 Shipping
Entry Billing
Invoice
Sales
General
Ledger &
Rept. Sys. Customer Sales Customer
3.2
Maintain Mailroom
Accts. Remittance
Rec. List
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BILLING
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BILLING
• Open-invoice method:
– Customers pay according to each invoice.
– Two copies of the invoice are typically sent to the
customer.
• Customer is asked to return one copy with payment.
• This copy is a turnaround document called a
remittance advice.
– Advantages of open-invoice method:
• Conducive to offering early-payment discounts
• Results in more uniform flow of cash collections
– Disadvantages of open-invoice method:
• More complex to maintain
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BILLING
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BILLING
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BILLING
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BILLING
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BILLING
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BILLING
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BILLING
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BILLING
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CASH COLLECTIONS
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CASH COLLECTIONS
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• Customers remit payments to
a bank P.O. box.
CASH COLLECTIONS • The bank sends the company:
– Remittance advices.
– An electronic list of the
• Possible approaches to collecting cash: remittances.
– Turnaround documents – Copies
forwarded toofaccounts
the checks.
receivable. • Advantages:
– Prevents theft by company
– Lockbox arrangements. employees.
– Improves cash flow
management.
• Lockboxes may be regional,
which reduces time in the
mail.
• Checks are deposited
immediately on receipt.
• Foreign banks can be utilized
for international customers.
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 90 of 161
CASH COLLECTIONS
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CASH COLLECTIONS
• Customers remit payment electronically to the
company’s bank.
• Possible approaches
• Eliminates mailingto collecting cash:
delays.
– Turnaround
• Typically done through
documents banking system’s
forwarded Automated
to accounts
Clearing House (ACH) network.
receivable.
• PROBLEM: Some banks do not have both EDI and EFT
– Lockbox arrangements.
capabilities, which complicates the task of crediting the
customer’s
– Electronic account on a timely basis.
lockboxes.
– Electronic funds transfer and bill payment.
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CASH COLLECTIONS
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CASH COLLECTIONS
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CASH COLLECTIONS
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REVIEW OF REVENUE CYCLE
ACTIVITIES
• Before we move on to discuss internal
controls in the revenue cycle, let’s do a
brief review of the organization chart,
including:
– Who does what in the revenue cycle?
– To whom do they typically report?
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 96 of 161
PARTIAL ORGANIZATION CHART FOR
UNITS INVOLVED IN REVENUE CYCLE
CEO
CEO
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PARTIAL ORGANIZATION CHART FOR
UNITS INVOLVED IN REVENUE CYCLE
CEO
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PARTIAL ORGANIZATION CHART FOR
UNITS INVOLVED IN REVENUE CYCLE
CEO
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PARTIAL ORGANIZATION CHART FOR
UNITS INVOLVED IN REVENUE CYCLE
CEO
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PARTIAL ORGANIZATION CHART FOR
UNITS INVOLVED IN REVENUE CYCLE
CEO
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PARTIAL ORGANIZATION CHART FOR
UNITS INVOLVED IN REVENUE CYCLE
CEO
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PARTIAL ORGANIZATION CHART FOR
UNITS INVOLVED IN REVENUE CYCLE
CEO
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CONTROL OBJECTIVES, THREATS,
AND PROCEDURES
• In the revenue cycle (or any cycle), a well-designed AIS
should provide adequate controls to ensure that the
following objectives are met:
– All transactions are properly authorized.
– All recorded transactions are valid.
– All valid and authorized transactions are recorded.
– All transactions are recorded accurately.
– Assets are safeguarded from loss or theft.
– Business activities are performed efficiently and effectively.
– The company is in compliance with all applicable laws and
regulations.
– All disclosures are full and fair.
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 105 of 161
CONTROL OBJECTIVES, THREATS,
AND PROCEDURES
• We’ll soon be discussing the threats that may
occur in the revenue cycle.
• If you understand the preceding objectives, you
probably won’t have to worry about
“memorizing” threats.
• Almost every threat represents a violation of one
of those control objectives.
• Let’s look more closely.
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 106 of 161
CONTROL OBJECTIVES, THREATS,
AND PROCEDURES
• In the revenue cycle (or any cycle), a well-designed AIS
should provide adequate controls to ensure that the
following objectives are met:
– All transactions are properly authorized.
– All recorded
• Atransactions arewould
related threat valid. be that a transaction
– All valid andwould go through
authorized without
transactions areproper authorization.
recorded.
– • Such
All transactions area transaction might result from either a
recorded accurately.
mistake or a fraud.
– Assets are safeguarded from loss or theft.
• EXAMPLE: An employee might process an
– Business activities are performed efficiently and effectively.
unauthorized write-off of his own account, so
– The company is in
that hecompliance withtoallpay.
wouldn’t have applicable laws and
regulations.
– All disclosures are full and fair.
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 107 of 161
CONTROL OBJECTIVES, THREATS,
AND PROCEDURES
• In the revenue cycle (or any cycle), a well-designed AIS
should provide adequate controls to ensure that the
following objectives are met:
– All transactions are properly authorized
– All recorded transactions are valid
– All
• The valid and
related authorized
threat is that a transactions are recorded
transaction would be recorded that
isn’t
– Allvalid, i.e., it didn’t
transactions actually occur.
are recorded accurately
• EXAMPLE
– Assets are 1: An employee records
safeguarded from lossa or
return
theftof merchandise on
his own account when the goods were never really returned.
– Business activities are performed efficiently and effectively
• EXAMPLE 2: Many financial statement frauds involve companies
– The company is in compliance with all applicable laws and
recording totally fictitious revenues in order to make the
regulations
company’s financial position appear more favorable than it
– All disclosures
actually is. are full and fair
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 108 of 161
CONTROL OBJECTIVES, THREATS,
• The related threat would be that a transaction that actually did
AND PROCEDURES
occur didn’t get recorded.
• EXAMPLE 1: An employee fails to record a sale that the
• Incompany made to
the revenue him (or
cycle so he won’t
any haveatowell-designed
cycle), pay the receivable.
AIS
• should
EXAMPLE 2: In financial
provide adequate statement
controlsfraud cases, the
to ensure thatcompany
the
often failsobjectives
following to record transactions
are met: that reduce income or net
assets, e.g., doesn’t record returns from customers or discounts
– All transactions
granted are omission
to them. This properly authorized.
causes net sales to appear
– All recorded
higher than they transactions
really are. are valid.
– All valid and authorized transactions are recorded.
– All transactions are recorded accurately.
– Assets are safeguarded from loss or theft.
– Business activities are performed efficiently and effectively.
– The company is in compliance with all applicable laws and
regulations.
– All disclosures are full and fair.
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 109 of 161
CONTROL OBJECTIVES, THREATS,
• The threat would be that a transaction is
AND PROCEDURES
recorded inaccurately. Inaccurate recording
typically means that a transaction is recorded
• In the revenue cycle (or any cycle), a well-designed AIS
either:
should provide adequate controls
– In the wrong to ensure that the
amount
– Inare
following objectives the met:
wrong account
– – Inproperly
All transactions are the wrong time period
authorized.
– All recorded •transactions
It could also mean that the transaction was
are valid.
credited to the wrong agents or participants.
– All valid and authorized transactions are recorded.
– All transactions are recorded accurately.
– Assets are safeguarded from loss or theft.
– Business activities are performed efficiently and effectively.
– The company is in compliance with all applicable laws and
regulations.
– All disclosures are full and fair.
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 110 of 161
CONTROL OBJECTIVES, THREATS,
AND PROCEDURES
• EXAMPLES: A fraud might involve a company:
– Over-recording the amount of a sale (wrong
• In the revenue cycle amount)
(or any cycle), a well-designed AIS
– Recording
should provide adequate an unearned
controls revenue
to ensure thatasthe
an earned
revenue (wrong account)
following objectives are met:
– Recording a sale earlier than it occurs (wrong
– All transactions are properly authorized.
time period)
– All recorded transactions
– Crediting
are the
valid.
wrong salesperson for the sale
(wrong agent)
– All valid and authorized transactions are recorded.
– All transactions are recorded accurately.
– Assets are safeguarded from loss or theft.
– Business activities are performed efficiently and effectively.
– The company is in compliance with all applicable laws and
regulations.
– All disclosures are full and fair.
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 111 of 161
CONTROL OBJECTIVES, THREATS,
AND PROCEDURES
• In the revenue •cycle
The(or
reverse side of these
any cycle), activities might
a well-designed AIS
include: controls to ensure that the
should provide adequate
– Under-recording a sales return (wrong amount)
following objectives are met:
– Debiting an asset account instead of sales
– All transactions are properly authorized.
returns (wrong account)
– All recorded transactions
– Recording
are valid.
the return later than it actually
occurred
– All valid and authorized (wrong time
transactions are period)
recorded.
– All transactions are recorded accurately.
– Assets are safeguarded from loss or theft.
– Business activities are performed efficiently and effectively.
– The company is in compliance with all applicable laws and
regulations.
– All disclosures are full and fair.
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 112 of 161
CONTROL OBJECTIVES, THREATS,
AND PROCEDURES
• In the revenue cycle (or any cycle), a well-designed AIS
should provide adequate controls to ensure that the
following objectives are met:
– All transactions are properly authorized.
– All recorded transactions are valid.
– All valid and• authorized
Threats intransactions
this area usually involve theft,
are recorded.
– All transactionsdestruction, or accurately.
are recorded misuse of assets, including data.
– Assets are safeguarded from loss or theft.
– Business activities are performed efficiently and effectively.
– The company is in compliance with all applicable laws and
regulations.
– All disclosures are full and fair.
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 113 of 161
CONTROL OBJECTIVES, THREATS,
AND PROCEDURES
• In the revenue cycle (or any cycle), a well-designed AIS
should provide adequate controls to ensure that the
following objectives are met:
– All transactions are properly authorized.
– All recorded transactions are valid.
– All valid and authorized transactions are recorded.
• The threat is that the activities would be
– All transactions are recorded
performed accurately.
inefficiently or ineffectively.
– Assets are safeguarded from loss or theft.
– Business activities are performed efficiently and
effectively.
– The company is in compliance with all applicable laws and
regulations.
– All disclosures are full and fair.
© 2008 Prentice Hall Business Publishing Accounting Information Systems, 11/e Romney/Steinbart 114 of 161
CONTROL OBJECTIVES, THREATS,
AND PROCEDURES
• In the revenue• cycle
The obvious
(or anythreat is a
cycle), non-compliance
well-designedwith
AISlaws
and regulations.
should provide adequate controls to ensure that the
• An example in the revenue cycle could be a car
following objectives arewho:
dealer met:
– All transactions are properly
– Sells authorized.
a vehicle to which he doesn’t have clear title;
– or
All recorded transactions are valid.
– – Refuses
All valid and authorized to allow a customer
transactions to return a car in
are recorded.
violation of state lemon laws.
– All transactions are recorded accurately.
• Another example might be requesting a credit
– Assets are safeguarded
check onfrom loss or theft.
a customer in violation of the Fair
– Credit
Business activities areReporting
performedAct (FCRA).and effectively.
efficiently
– The company is in compliance with all applicable laws
and regulations.
– All disclosures are full and fair.
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CONTROL OBJECTIVES, THREATS,
AND PROCEDURES
• In the revenue cycle (or any cycle), a well-designed AIS
should provide adequate controls to ensure that the
following objectives are met:
– All transactions are properly authorized.
• The threat is incomplete and/or misleading
– All recorded transactions
disclosures. are valid.
– All valid and• authorized
This threattransactions are recorded.
is more important in other areas,
– All transactions are recorded
particularly accurately.
those areas that involve liabilities
– and contingencies.
Assets are safeguarded from loss or theft.
– • However,
Business activities one threatefficiently
are performed in the revenue cycle could
and effectively.
be misleading disclosures about customers’
– The company is in compliance with all applicable laws and
rights to return product.
regulations.
– All disclosures are full and fair.
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CONTROL OBJECTIVES, THREATS,
AND PROCEDURES
• While we’re going to step through a number of
common threats in the revenue cycle, it’s a good
idea to memorize the internal control objectives
so you can think of the relevant threats on your
own.
• If you don’t like the text version, click on the
button below to see a rhyming version of the
same objectives.
Poet’s
Corner
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CONTROL OBJECTIVES, THREATS,
AND PROCEDURES
• There are several actions a company can take
with respect to any cycle to reduce threats of
errors or irregularities. These include:
– Using simple, easy-to-complete documents with
clear instructions (enhances accuracy and
reliability).
– Using appropriate application controls, such as
validity checks and field checks (enhances
accuracy and reliability).
– Providing space on forms to record who completed
and who reviewed the form (encourages proper
authorizations and accountability).
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CONTROL OBJECTIVES, THREATS,
AND PROCEDURES
– Pre-numbering documents (encourages recording
of valid and only valid transactions).
– Restricting access to blank documents (reduces
risk of unauthorized transaction).
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THREATS IN SALES ORDER ENTRY
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THREATS IN SALES ORDER ENTRY
• You can click on any of the threats below to get
more information on:
• Threats in the sales
– The types oforder
problemsentry
posed by process
each threat.
– The controls that can mitigate the threats.
include:
1. THREAT 1: Incomplete or inaccurate
customer orders
2. THREAT 2: Sales to customers with poor
credit
3. THREAT 3: Orders that are not legitimate
4. THREAT 4: Stockouts, carrying costs, and
markdowns
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THREATS IN SHIPPING
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• You can click on any of the threats below to get
more information on:
THREATS
– The typesIN BILLING
of problems posed by each threat.
– The controls that can mitigate the threats.
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THREATS IN CASH COLLECTION
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GENERAL CONTROL ISSUES
• You can click on any of the threats below to get
more information on:
• Two general objectives
– The types ofpertain
problems to activities
posed in
by each threat.
every cycle: – The controls that can mitigate the threats.
– Accurate data should be available when needed.
– Activities should be performed efficiently and
effectively.
• The related general threats are:
– THREAT 11: Loss, alteration, or unauthorized
disclosure of data
– THREAT 12: Poor performance
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REVENUE CYCLE INFORMATION
NEEDS
• We’ve examined the various threats in the
revenue cycle and the controls that can
mitigate those threats.
• Let’s move on to summarize the
information needs in the revenue cycle.
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REVENUE CYCLE INFORMATION
NEEDS
• Information is needed for the following
operational tasks in the revenue cycle:
– Responding to customer inquiries
– Deciding on extending credit to a customer
– Determining inventory availability
– Selecting merchandise delivery methods
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REVENUE CYCLE INFORMATION
NEEDS
• Information is needed for the following
strategic decisions:
– Setting prices for products/services
– Establishing policies on returns and warranties
– Deciding on credit terms
– Determining short-term borrowing needs
– Planning new marketing campaigns
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REVENUE CYCLE INFORMATION
NEEDS
• The AIS needs to provide information to evaluate critical
revenue cycle processes:
– Response time to satisfactorily resolve customer inquiries
– Time to fill and deliver orders
– Percentage of sales orders back ordered
– Customer satisfaction rates and trends
– Analyses of market share and sales trends
– Profitability by product, customer, and region
– Sales volume in dollars and market share
– Effectiveness of advertising and promotions
– Sales staff performance
– Bad debt expense
– Days receivables outstanding
– Remittances processed daily
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REVENUE CYCLE INFORMATION
NEEDS
• Both financial and non-financial
information are needed to manage and
evaluate revenue cycle activities.
• Likewise, both external and internal
information is needed.
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REVENUE CYCLE INFORMATION
NEEDS
• When the AIS integrates information from the
various cycles, sources, and types, the reports that
can be generated are unlimited. They include
reports on:
– Sales order entry efficiency
– Sales breakdowns by salesperson, region, product, etc.
– Profitability by territory, customer, etc.
– Frequency and size of backorders
– Slow-moving products
– Projected cash inflows and outflows (called a cash
budget)
– Accounts receivable aging
– Revenue margin (gross margin minus selling costs)
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REVENUE CYCLE INFORMATION
NEEDS
• Accountants should continually refine and
improve an organization’s performance
reports.
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SUMMARY
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SUMMARY
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