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The revenue cycle is a method of defining and maintaining the processes used for the completion of an accounting process for recording revenue generated from services or products provided by the company, which include the accounting process of tracking and recording transaction from the beginning, normally which starts from receiving an order from the customer or entering in agreement with the customer, delivering an order to customer and end with getting payment from the customer. The figure on the next page describes the different business activities of four departments, including (1) Sales Department, (2) Accounting Department, (3) Warehouse/Shipping, and (4) Mailroom.   Required: Based on the below figure, discuss the uncontrolled risks associated with the system as currently configured? And describe the controls that need to be implemented into the system to mitigate the risks in the given scenario.

The revenue cycle is a method of defining and maintaining the processes used for the completion of an accounting process for recording revenue generated from services or products provided by the company, which include the accounting process of tracking and recording transaction from the beginning, normally which starts from receiving an order from the customer or entering in agreement with the customer, delivering an order to customer and end with getting payment from the customer. The figure on the next page describes the different business activities of four departments, including (1) Sales Department, (2) Accounting Department, (3) Warehouse/Shipping, and (4) Mailroom.   Required: Based on the below figure, discuss the uncontrolled risks associated with the system as currently configured? And describe the controls that need to be implemented into the system to mitigate the risks in the given scenario.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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The revenue cycle is a method of defining and maintaining the processes used for the completion of an accounting process for recording revenue generated from services or products provided by the company, which include the accounting process of tracking and recording transaction from the beginning, normally which starts from receiving an order from the customer or entering in agreement with the customer, delivering an order to customer and end with getting payment from the customer. The figure on the next page describes the different business activities of four departments, including (1) Sales Department, (2) Accounting Department, (3) Warehouse/Shipping, and (4) Mailroom.

 

Required: Based on the below figure, discuss the uncontrolled risks associated with the system as currently configured? And describe the controls that need to be implemented into the system to mitigate the risks in the given scenario. 

Sales Department Customer Customer Order Approve credit, prepare Sales Order and Record Sale Sales Order Sales Invoice Packing slip Sales Journal Check Deposit Slip Bank Accounting Department Sales Order Check Remittance advice Sales Invoice Packing Slip Bill Customer, record CR, Update Accounts Sales Invoice Customer . Sales Order Packing Slip A AR Sub Ledger GL Accounts CR Journal Warehouse/Shipping Sales Order Sales Order Packing Slip Pick Goods, Update Inventory, send goods to Carrier Packing Slip Carrier Inventory Sub ledger Mailroom Customer Check Remittance Advice Open mail and reconcile RA and Check Check Remittance Advice
Transcribed Image Text:Sales Department Customer Customer Order Approve credit, prepare Sales Order and Record Sale Sales Order Sales Invoice Packing slip Sales Journal Check Deposit Slip Bank Accounting Department Sales Order Check Remittance advice Sales Invoice Packing Slip Bill Customer, record CR, Update Accounts Sales Invoice Customer . Sales Order Packing Slip A AR Sub Ledger GL Accounts CR Journal Warehouse/Shipping Sales Order Sales Order Packing Slip Pick Goods, Update Inventory, send goods to Carrier Packing Slip Carrier Inventory Sub ledger Mailroom Customer Check Remittance Advice Open mail and reconcile RA and Check Check Remittance Advice
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