Tài liệu FINANCIAL SYSTEMS & ANALYSIS pdf

Inventory systemsProcess Risks Possible control procedure Inventory arrives because it has been purchased, or sales has been returned •Inventory stolen at arrival •New purchases mixed up

FINANCIAL SYSTEMS & ANALYSIS

INVENTORY & CASH

• Objectives of control

Inventory level are in keeping with the needs of

• Production of raw material

• Customer demand (finished goods)

Inventory level are not

• Excessive

• Too low (stockouts)

Value for money is achieved

Goods and services are what was ordered

Quality goods and services delivered are satisfactorily

Liabilities are recorded completely and accurately

Only valid liabilities are paid

Liabilities are paid in sensible, commercial timescale

Inventory systems

Process Risks Possible control procedure

Inventory arrives because

it has been purchased, or

sales has been returned

•Inventory stolen at arrival

•New purchases mixed up with returns

•Poor quality inventory accepted

•Inventory accepted that was never ordered

•No records was made of its arrival

1 All goods inwards received at set locations and signed for / logged in by stores manager

2 All returns sent to returns department for checking

3 See purchase cycle

Inventory is stored until

needed •Poor storage conditions

lead to damaged inventory

•Inventory items not used before their useful life ends

•Inventory stolen from storage area

1 Storage area filled with sprinklers, fire alarms, temperature controls

2 Inventory rotated to ensure FIFO usage where relevance

3 Valuable inventories locked away and inventory areas limited

to single exit (security)

Process Risks Possible control procedure

Raw materials leave stores,

to be used in production •Material over ordered to

enable theft 1 All requisitions from stores to have signed

authorization from production manager

2 Use standard quantity requirements

Finished goods leave

because they have been

sold

•Wrong goods sent

•Goods being stolen (no real sale)

•Poor quality sent

•Records not updated

1 See sales cycle (Goods despatched)

Goods leave because they

are being returned to

supplier

•Returned goods actually being stolen See Purchase returns

Process Risks Possible control procedure

An inventory count is

performed (may be

monthly /annually)

•Counting lacks accuracy

•Staff lied about amount counted to cover their theft

•Inventory record lost during count

•Inventory wrongly counted because it is moved during count

1 All counted areas to be marked

as completed

2 Managers to check by doing random second counts

3 Staff do not count areas that they are usually responsible

4 Counting done in pairs

5 Inventory sheets sequenced and counters sign out /in the count sheets

6 All inventory movements during counts authorized by

management

7 Closure during inventory accounts to avoid problems

Bank & Cash

• Objectives of control

• Cash balance are safeguarded

• Cash balances are kept to a minimum

• Money can only be extracted from bank accounts for authorized purposes

Cash Cycle

Objectives Possible control procedure

Cash balances are safeguarded 1 Safes / strong room/ locked cashbox

with restricted access

2 Security locks

3 Swipe card access

4 Key access to tils

5 Night safes

6 Imprest system ( Petty cash)

7 Use of security service for large cash movements

8 People making bankings vary routes and timings

Cash balances are kept to minimum 1 Tills emptied regularly

2 Frequent banking of cash and cheques received

Cash Cycle

Objectives Possible control procedure

Money can only be extracted from bank

accounts for authorized purposes 1 Restricted list of cheques signatories2 Dual signature for large amounts

3 Similar control over bank transfers and online banking eg Secure passwords and pin numbers

4 Cheque books and cheque stationery locked away

5 Regular reconciliations reviewed by person with suitable level of

authorities

Example of control test

• Cash receipts

Attend mail opening and ensure procedures are adhered

Test independent check of cash receipts to bank lodgements

Test for evidence of sequence checks on any pre-numbered receipts for cash

Test authorization of cash receipts

Test for evidence of arithmetic check on cash received records

Example of control test

• Cash Payments

 Inspect current cheque books for

 Sequential use of cheques

 Controlled custody of unused cheques

 Any signature on blank cheques

 Test (to avoid double payment) to ensure that invoice paid are marked PAID

 Test for evidence arithmetic checks on cash payments records including cashbooks

 Examine evidence of authority for current standing orders and direct debits

Example of control test

• Bank Reconciliations

 Examine evidence of regular bank reconciliations,

at least once per month but in larger

organisations this should be done daily or weekly

 Examine evidence of independents checks of

bank reconciliations (signature)

 Examine evidence of follow up of outstanding

items on the bank reconciliation Pay particular attention to old outstanding reconciling items

that should be written back such as old,

unpresented cheques

Example of control test

• Petty Cash

 Test of petty cash vouchers for appropriate

authorizations

 Test cancellations of paid cash vouchers

 Test for evidence of arithmetical checks on petty cash records

 Test for evidence of independent checks on petty cash balance

 Performs a surprise petty cash count and

reconcile to petty cash records