Controls over Sales System

Sales Order Function Dispatch Function Invoicing/Billing Function GL/Accounts Function

1. Segregation of Duties (order, 1. Prenumbered GDN for 1. Segregation of duties 1. Segregation of duties
and credit limit Authorization every dispatch. (order, dispatch, invoice). (invoice, recording, collection).
are kept separate dept.) 2. Cross-check with sales 2. Prenumbered Invoices. 2. Batch Totals.
2. Authorization of credit limit order and sign GDN. 3. Recalculation/Cross 3. Control A/C reconciliation.
(by separate dept.) 3. Acknowledgement checking of invoice with 4. Monthly Account
3. Check credit limit. from customer. Order & GDN. statements.
4. Prenumbered orders. 4. Daily transfer of GDN 4. Prenumbered and 5. Aging analysis to identify
5. Use authorized rates. to record in accounts. authorized credit notes overdue & follow up.
6. Dispatch every sales order. (cross check with invoice). 6. Authorization of bad debts.
Controls over Purchases System
Purchase Order Function Receiving Function Invoicing/Billing Function GL/Accounts Function
1. Segregation of Duties (user and 1. Segregation of 1. Segregation of duties 1. Check complete
order dept.). duties. (order, receiving, invoice). purchase trail is
2. List of approved suppliers, with 2. Prenumbered GRN 2. Recalculation/Cross available (PO, GRN,
Access controls. for every receipt. checking of invoice with Order invoice).
3. Order only to approved suppliers 3. Cross-check purchase & GRN. 2. Batch Totals.
at lowest quotation. order and sign GRN. 3. Check discount allowed by 3. Control A/C
4. Authorization of all purchase 4. Daily transfer of GRN suppliers. reconciliation.
order. to record in accounts. 4. Prenumbered and 4. Monthly Account
5. Prenumbered orders. authorized debit notes. statements.
Controls over Payroll System
Calculating Gross Wages and Salaries Calculation of tax and Payment of wages and Recording payroll
other deductions salaries in accounts
Only for real employees: 1. Use latest rates of 1. Authorization payments 1. Use authorized
1. Segregation of duties (HR & Payroll). tax. by CFO (total as well as payroll.
2. Authorization of Appointment & pay by 2. Authorization of individual). 2. Timely recording.
HR. voluntary deduction by 2. Confirmation of identity 3. Reconciliation of
3. Pay authorized by HR. employee. before payment (for cash, payroll file with
4. New employees authorized by HR. 3. Recalculation and as well as bank transfer). general ledger.
5. Communication of resigned employees. approval of deduction 3. Reconciliation of salaries
Only for real work: by independent person. payable with salaries paid.
6. Prenumbered and authorized Time Sheets 4. Timely payment of
(or clock-card system with monitoring). deductions.
7. Approval of overtime & bonus.
8. Use authorized time sheet and rates.
Calculated correctly:
9. Range Tests.
10. Recalculation and approval of payroll by
independent person.
Controls over Inventory System
Recording Inventory Physical Safeguarding of Valuation of Inventory Management of
Inventory Levels of Inventory
1. Segregation of duties (ordering, 1. Restricted physical 1. Updated Standard 1. Inventory levels.
custody, recording). access. Costing.
2. Inventory records. 2. Inventory count and 2. Identification of slow
3. Accurate and timely recording of reconciliation. moving items.
receipts.
4. Accurate and timely recording of issues.
Controls over Fixed Assets System
Authorization of additions/deletions Recording of expenditures
1. Authorization of purchases and disposal. 1. Marking of invoices for correct classification.
2. Approval of invoices. 2. Recording in appropriate accounts.
3. Sequential numbering on fixed assets. 3. Reconciliation.
4. Updated fixed assets’ register.
 Controls over Cash and Bank System
Cash Receiving Cash Payments Cash Balance Petty Cash
1. Segregation of duties (receiving & 1. Supporting Controls over Cash in 1. Set reasonable limit.
recording). documents. hand: 2. Keep petty cash in heavy locked
Controls over cash received 2. Cancellation of 1. Restricted employees box (or locked drawer) in secured
through Post: documents. to receive cash. place.
1. Monitor mail-opening process. 3. Authorization 2. Heavy locked box in 3. Spending on pre-approved
2. Listing of cash received by of payments. secured place. expenses only.
independent person. 4. Prompt Controls over Bank 4. Spending should be supported by
Controls over Cash Sales (at Recording. Balance: documents and recorded on petty
counter): 1. Established cash voucher.
1. Restricted employees to receive procedures for new 5. Surprise checks of petty cash by
cash. bank account. independent person.
2. Till roll or cash receipts for every 2. Segregation of 6. Petty cash expenses should be
transaction. duties. periodically recorded in general
3. Reconciliation of cash received 3. Secure cheque book. ledgers, after review by finance
and recording by independent 4. Bank Statement manager.
person. reconciliation. 7. When petty cash is “topped up”,
Controls to ensure all money 5. Control over devices the amount of withdrawal from bank
received is banked: used to prepare should be equal to total of petty
1. Prompt banking. cheques electronically. expenses recorded.
2. Match deposit slip in bank with
receipts and cash book.