| Country : | Australia |
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Assignment Task:
Task:
• Reference sources must be cited in the text of the report and listed appropriately at the end in a reference list using Harvard referencing style. • Include a minimum of ten (10) references, at least five (5) from peer-reviewed journal relevant to the unit.
ASSIGNMENT DETAILS
The Revenue Cycle of XYZ Limited. After finishing your Master of Professional Accounting, you started your accounting consultancy in Brisbane, Queensland, Australia. You got a high distinction in HI5019 Strategic Information System and preferred to analyse the business processes, risks and internal controls. XYZ is one of your clients, and the CEO of XYZ is delighted with your services.' The head of the accounting department is concerned about their revenue cycle. Therefore, he has recently contacted you to evaluate their revenue cycle. During the initial meeting, you elaborate him that conceptually, the revenue cycle is a recurring set of business activities and related data processing operations associated with providing goods and services to customers and collecting their cash payments. This definition reveals that the revenue cycle can be categorised into (1) sales order processing procedures (SOP?), and (2) cash receipts procedures (CRP). The SOPP and CRP of XYZ are elaborated below. Therefore, you requested the head of the accounting department to describe the SOPP and the CRP of XYZ Limited separately. This description is given below.
SOPP of XYZ Limited The sales department receives the unstandardised sales order since customer orders are mailed, e-mailed or faxed to the sales department. The sales clerk first converts the unstandardised sales order into the standardised sales order. For this purpose, the sales representative requests the missing information, if any. When the order is received, the sales clerk checks the customer's creditworthiness of the customer from his computer terminal. Three years ago, the sales clerk requested the accounting department to provide him with a list of customers whose account receivables are written off. The sales clerk is still using this information to check the creditworthiness of the customers. The sales clerk is using the same procedure to check the creditworthiness of the new customers.
The customer's order is rejected if the customer's credit is not verified. The sales order processing is started after the credit verification. In particular, the sales clerk records the approved standardised sales order in the sales order system through his computer terminal. A digital copy of the order is distributed to the warehouse and the shipping department terminals for further processing. The computer system automatically records the sale in the sales journal. The clerk reviews this entry and files the hard copy of the customer order in the sales department.
XYZ is a wholesaler of rafting and camping equipment that serves outdoor sports camping retailers throughout the Queensland.
The accounts receivable clerk receives the remittance list and remittance advice from the mailroom and reconciles these two documents. He then updates the accounts receivable subsidiary ledger and the general ledger. Then, account receivable files the two documents in the department.
Required Based on the above information, prepare a report for the CEO of XYZ Limited to evaluate their revenue cycle. In your report, you need to include the following items:
1. The CEO asks you to start the report from five general risks involved in the revenue cycle of any business. Further, indicate the physical and IT control against each risk. 2. Describe potential internal control weaknesses in the sales order processing procedures and cash receipts procedures of XYZ Limited. 3. Discuss the potential risks associated with the internal control weaknesses identified in Section (2) above. 4. Based on Section (3) above, what types are frauds are possible. Hint: we have discussed different types of frauds in the interactive tutorial and lectures. Your discussion should be based on these contents.
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