The sales system

The sales system

1. STAGE 1: ORDERING

   • Objective 1: goods and services are only supplied to customer with good credit rating
     • Risk: unrecognized weak credit customers
     • Control activities
       • Credit check (information processing)
       • review credit limitation regularly (performance review)
     • Test of control
       • Credit check new customers by inspecting a sample
       • create fake order over credit limitation
   • Objective 3: orders are recorded correctly
     • risk: mis-recorded or recorded incorrectly
     • control activities
       • use pre-printed, stadard order form
       • confirm order details with customers
       • check the sequential numbered orders
     • Test of control
       • inspect pre-printed order forms
       • review customers confirmations
   • Objective 4: orders are fulfilled
     • Risk: orders go unfulfilled
     • control activities
       • match customer orders with GDNs
       • investigate unmatched orders
       • regularly review
       • create committee to response customer's complaint
     • Test of control
       • review order file for unmatched GDNs or delivery records
       • investigate any unfulfilled orders
   • Objective 2: orders are processed
     • Risks
       • accepted order at wrong price
       • wrong customers, quantity
       • not authorized
     • Control activities
       • standard price list
       • discount must be authorized
     • Test of control
       • review standard price list
       • trace back to authorized discount email/form
       • inspect whether confirmation was sent
       • inspect sample of sale orders

2. STAGE 3: INVOICING

   • Objective 1: All goods and services are correctly invoiced
     • Risk: goods despatched are not invoiced / invoiced incorrectly
     • Control activities
       • numbering invoices and checking with GDN
       • All information are authorized
     • Test of control
       • matching invoice, GDNs, sale orders by sampling
       • check sequential of invoice
       • compare sample of invoices with authorized price and credit terms
   • Objective 2: All invoices raised relate to goods and services supplied by the business
     • Risk: Invoices raised for goods/services not supplied
     • Control activities: Invoices only raised after GDN raised
     • Test of control:
       • Observation and enquiry of staff
       • Review of customer correspondence
   • Objective 3: Credit notes are only given for valid reasons
     • Risk: Invoices may be wrongly cancelled by credit notes, resulting in a loss to the business.
     • Control activities
       • Check the details on credit notes
       • Sequential numbering and regularly check credit notes
       • Verification of credit notes against supporting documentation
       • Authorization of credit notes.
       • Recording of goods returned on goods returned notes.
     • Test of control
       • Verify credit notes
       • Test the numerical sequence of credit notes

3. STAGE 2: GOODS DESPATCHED

   • Objective 1: Ensure that the correct items are despatched in terms of item, quantity and condition
     • Risk: The wrong items, wrong quantity or damaged goods are despatched
     • Control activities
       • recheck goods outwards
       • spot check
     • Test of control
       • Vouch a sample of items packed to the GDNs and order form
       • physical inspection
       • Review customer complaint
   • Objective 2: ensure that all goods ordered are despatched/fulfilled
     • Risks
       • An order is not fulfilled
       • Despatch goods that do not have sales order
     • Control activites
       • sequential numbering GDNs and sale orders
       • A copy of GDN should be passed to the sales department by the warehouse team once the order is despatched
       • regularly review order form
       • Despatch only on a sales order
       • Despatch only to authorised customers.
     • Test of control
       • Review a sample of unfulfilled orders
       • testing the numerical sequence
       • Verify that goods are only despatched based on a sales order through samples
       • Review the matching of despatch notes to sales orders through samples
   • Objective 3: ensure that goods are despatched to the required destination
     • Risk: That goods are not despatched to the required destination
     • Control activites
       • On receipt of the goods, the customer signs the multi-part GDN.
       • One copy should then be left with the customer and the others returned with the delivery driver
     • Test of control
       • Review a sample of GDNs for evidence of the customer’s signature.
   • Objective 4: All despatches of goods are recorded
     • RIsk: Goods may be despatched but not recorded
     • Control activities
       • Recording of all goods outwards on a despatch note.
       • Pre-numbering of despatch notes and regular checks on the sequence.
       • Supervision of warehouse
       • Regular inventory counts to identify goods missing
       • Inventory records updated from GDNs
     • Test of control
       • reconcile between despatch notes and inventory records
       • Check the matching of despatch notes to sales orders and invoices