Client Period Sept WP No.

     

Process Order to Cash Prepared Date

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 Obtain a process description for each section which you are auditing and place on file as per scope
letter: sales prices, ordering to invoicing, credit notes, debtor masterfile changes, debtor journals,
debtors age analysis, general ledger reconciliations.
 Where there is a control breakdown – consider the root cause of the problem, the fact that a
reconciliation is not signed may not be the true finding; the finding may be the person was on leave
resulting in the finding that there is no delegation of duties.
 Where there is a control gap – consider what the compensating controls are.

ALL SUPPORTING DOCUMENTATION ON FILE AS EXAMPLES

Program objective – System description

To obtain a detailed system description on all areas to be audited and from this to identify possible
weaknesses.

Risk Audit procedures Completed WP

by and date reference
Possible gaps/ 1 Through discussions with management
weaknesses in obtain a detailed system description on
overall system. all areas to be audited.
2 Bear in mind the following points:
a. How is the specific process
performed / managed; and
b. Is the process the same for Export
customers and local customers (do
they have local and export
customers – if yes, sample testing to
incorporate both of these)
c. Determine whether there are SOP’s
in place relating to the following
sections, if so obtain and use to get
the system description and updated
the AP.
d. Update AP based on the information
obtained during process description.
Sales prices
1 Through discussions with Management
determine the following:
a. How are sales prices for different
customers and list prices
determined?
b. How are prices loaded onto the
system?

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c. What documentation is needed for
prices to be loaded?
d. Who must authorise price changes
or new prices to be loaded onto the
system?
e. Are the sales prices loaded on the
system reviewed by an independent
person to ensure that these are
correctly loaded?
Orders Process (placing the order to being
released for picking an invoicing)
 How are orders communicated by the
client to Company Name (site)?
 How are these loaded onto the order
system?
 Who load these onto the order system?
 Are the orders pre-numbered?
 Are the client orders authorised by a
specific individual (i.e. – independent
from the person loading)?
 In the event that a customer places an
order but has exceeded his credit limit
will this account be blocked on the order
system?
 What will happen in these
circumstances, will the account be
unblocked so that the order can be
released or the order not to be processed
at all?
 What happens if there is not sufficient
stock on hand to fulfil the customers
order?
 Once the order has been released/
approved, how is the order
communicated to the warehouse for
picking of stock?
 How does the order system link to the
invoicing system?
Picking, shipping and delivery of stock from
the finished goods warehouse to the
customer
 What information is received from the
sales department when stock needs to be
picked?
 What information is received from the

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sales department (i.e. information on
picking slip)?
 How do Pickers know when and from
where the stock should be picked and
loaded (onto which truck)?
 What if the stock is not at the specified
location?
 What happens if the correct quantity of
stock is not available as required per the
pick list?
 Is stock picked per customer order or is
it picked for all customer order at once?
 How is the stock then sorted to be
loaded onto the trucks?
 Who picks the stock?
 Does anyone verify the goods as they are
loaded onto the trucks?
 What are they verifying the goods
against, pick slip/ POD/ invoice?
 What supporting documentation is
signed?
 Obtain a specimen signatory list in order
to verify who has signed the various
supporting documentation which you
will be reviewing during the audit.
 What documentation will accompany the
goods?
 How is the stock delivered to the clients,
i.e. route taken?
 What happens once the stock is
delivered i.e. what documentation is
completed, signed, kept by the client and
returned to Company Name (site)?
 Where is the supporting documentation
filed?
Invoicing
 How and when do invoices get generated
from the system?
 Who generates these?
 How are these communicated to the
customer (with the stock or via mail, fax
etc)?
 Are there instances were pre-invoicing
will take place around month end

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especially when goods are to be
delivered the month following month
end. What is done to control pre-
invoicing? To ensure that sales are not
pre-invoiced and then reversed the next
month.
 Through discussions determine what the
controls are around manual invoices for
example:
 Who prepares the manual invoices;
 Why would manual invoices be
prepared;
 When are these captured onto the
system and by whom;
 Where are manual invoices kept;
 How does management ensure that
all manual invoices which are
completed and issued are captured
on the sales system?
Returns/ credit notes from customers
Stock returns
 Identify the procedures in place when
goods are returned or credit notes are
requested by the customer. Evaluate the
adequacy thereof by considering the
following:
- Types of returns stock;
- Physical stock return;
- Appropriate supporting
documentation to accompany the
return;
- Acceptance of the goods;
- Completing appropriate return
documentation (the documents in
place for goods);
- Updating the system (how does
recording take place i.e. to which
accounts – obtain screen prints);
- Authorisation of returns; and
- Who gives the instruction to uplift
the stock?
Pricing credit notes
 What documentation is required from
the client i.e. deal sheets?
 Do they investigate the root causes?
 Is the credit request investigated prior to
the credit being granted?
 Who would process these credit notes?

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 Who authorises the pricing credit notes?
 What documentation is prepared by
Company Name (site)?
Debtors Management
New debtors
Obtain an understanding of how new debtors
are created and loaded onto the system.
1 What documentation is completed by
customer and Company Name (site),
what documentation is required from the
client?
2 How are credit limits determined for
new debtors and who approves these?
3 Is there a limit of authority list with
regards to approval of credit limits?
4 Who loads new debtors onto the system?
Debtors masterfile changes
 What types of changes are processed
onto debtors masterfile?
 Who initiates the change / who prepares
the documentation for authorisation?
 What documentation is required to
process these changes?
 Who authorises these changes. Is the
authorisation done before or after the
change is processed?
 Process followed to upgrade credit
limits.

 Who authorises changes to credit limits?

 Are credit limits authorised prior to the
change being processed?
 Is a second person required to authorise
the transaction / change on line; and
 Who has access to effect masterfile
changes?
 Is an exception report generated monthly
/ weekly and reviewed by an
independent person?
Debtors journals
Determine from management the following
with regards to debtors journals
 What types of journal entries are
processed?

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 Who initiates a journal entry?
 Who authorises the journal entry?
 Who records a journal entry?
 Who releases the journal entry?
 Who reviews the completeness and
accuracy of the journal entry processed
or who reviews an exception report
reflecting all journal entries passed?
 What documentation supports the
journal entry?
Debtors age analysis
 Who reviews the debtors age analysis?
 Do they follow up on long outstanding
items?
 Do they use an unallocated receipts
account or a suspense account? Who
reviews this account? Who can allocate
from this account?
 Do they use open item matching or how
are the invoices paid processed onto the
system?
General ledger reconciliations
 Which reconciliations are prepared?
 Who prepares?
 Who reviews?

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 Program objective – Sales prices
 To check the accuracy and validity of sales prices loaded onto the system.
 To verify that sales price exception reports are generated and reviewed by an independent person.

Risk Audit procedures Completed WP

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 Unauthorised 1. Select a sample of twenty changes to sales
changes prices for the period under review (split the
effected to sales sample between list prices and cycle prices).
prices. Procedures are not limited to this.
 Sales prices  Agree the changes to the sales price to
processed onto an authorised document.
the system
 Check that the change has been effected
inaccurately.
timeously.
 Trace the change from the supporting
document through to the system to check
that the change has been processed
accurately.
 Check that the supporting documentation
has been stamped “processed” to prevent
resubmission.
2. Obtain the price masterfile changes report
(this will probably be a separate report for
list prices and for cycle prices) for the period
under review.
 Check that this report has been subject to
an independent review by a senior
person.
(Update audit programme as per process
description.)

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 Program objective – Ordering to invoicing
 To check the accuracy, validity and completeness of picking and dispatching of stock to customers.
 To check that all PODs are timeously received and outstanding PODs are followed up.
 To check that there is evidence of receipt by the customer of the goods ordered.
 To check that customers are billed for the goods dispatched and received by the customer.
 To check that the customers are billed at the correct price.
 To check that adequate controls are in place around manual invoices (delivery notes).

Risk Audit procedures Completed WP

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 Invalid orders Ordering - invoicing
generated, Select a sample of twenty customer orders
picked and placed (determine which customers are
dispatched. Company Name (site) customers – ensure
 No supporting that your sample is representative of the
evidence that a various Company Name (site) products and
customer covers the period under review).
received the Perform the following (not limited to this) :
stock should the
 For the customer selected – agree to a
customer have a
signed credit application form
claim re:
(according to the authority levels)
payment.
 No supporting  Obtain a copy of the order.
evidence that a  Agree the order (quantity and products)
customer has to a copy of the pick slip (one line item.)
received the  Check that the person picking the stock
stock to support has signed the picking slip as evidence
the invoice of picking the stock.
generated to the
customer.  Agree the pick slip details (what was
 Potential actually picked) to what is reflected on
the invoice/ delivery note (if a separate
misappropriatio
delivery note is used – ensure that you
n of stock.
have a copy of the delivery note and
 Potential loss of invoice). (One line item.)
funds due to
incorrect  Check that the driver has signed the
pricing. delivery note as evidence of receipt of
 Increase in the goods for delivery.
credit notes due  Check to see that the customer has
to goods being signed for receipt of the goods.
invoiced at the  Check that the customer was invoiced
incorrect price. for the goods received.
 Customers not  Agree the invoice to the customer
invoiced for statement at month end.
stock delivered
and received.  Agree the price reflected on the invoice
to the deal sheet/ list price in place for a
product reflected on the invoice.
PODs
Procedures are not limited to this.
 Check that an outstanding POD report is
generated and subject to an independent
review.
 Obtain the latest copy of the outstanding

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POD report/ register.
 Are there any long outstanding PODs
reflected?
Manual invoices
Procedures are not limited to this.
 Test/ observe the controls in place over
the safeguarding of manual invoice
books.
 Are there separate manual invoice and
manual delivery note books?
 Is a stationery control register
maintained for issuing these books?
 Who all has a manual invoice/ delivery
note book?
 How is the completeness of processing
manual invoices onto the system
ensured?
Select a sample of twenty manual invoices/
delivery notes issued.
 Check that the manual invoice agrees to
the order and the pick slip.
 Check that the driver has signed the
manual invoice/ delivery note as
evidence of receipt of stock.
 Check that the customer has signed the
manual invoice as evidence of receipt of
stock.
 Check that the manual invoice has been
processed onto the system timeously.
 Check that the manual invoice has been
processed onto the system accurately
(i.e. agrees to the system generated
invoice).
 Check that the manual invoice is cross-
referenced to the system generated
invoice.
 Check that the manual invoice has been
stamped “processed”.
Obtain the audit trail of all manual invoices
processed.
 Review the report to determine whether
all manual invoices have been captured.
Follow up on the gap in the sequence.

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 Program objective – Credit notes
 To check the accuracy, validity and completeness of pricing and stock credit notes.
 To check the timeous, complete and accurate processing of credit notes.

Risk Audit procedures Completed WP

by and date reference
 Unauthorised Stock credit notes
credit notes Select a sample of ten stock credit notes and
processed. perform the following (testing is not limited
 Stock credit to this). Split your sample between good
notes processed stock returned and damaged stock; same day
for stock not returns, returns at a later date – where
physically possible:
received. Same day delivery
 Credit notes  Agree the credit note generated to
processed supporting documentation i.e. POD,
inaccurately customer claim.
 Invalid pricing
 Check that the customer has signed
claims
supporting documentation.
processed.
 Stock credit  Check that the supporting documentation
notes not has been appropriately approved prior to
processed processing.
timeously.  Where stock is returned, check that the
warehouse personnel have signed for
receipt of the stock returned.
 Check that the supporting documentation
has been stamped processed.
 Check that there is adequate segregation
of duties between receipt of stock,
processing and approval of credit notes.
 Where good stock is returned, check that
the stock has been processed back into
the warehouse (verify the transaction on
the system i.e. warehouse transfer/ per
type of credit note generated
automatically updates that sub
inventory).
 Where damaged goods are returned,
check that the stock is stored separately
in a locked cage. Determine whether the
stock is sent for repacking or destroyed.
 Repacking: obtain the necessary
supporting documentation. Verify the
system transaction for the transfer back
into stock.
 Damaged: obtain the destruction
certificate. Verify that the stock has been
written off as damages on the system –
this could be linked to the type of credit
note generated.
 Does a Quality Control Manager inspect
returns returned to stock?
 Agree the reason for return as stated on

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the supporting document to the reason
processed onto the system (credit note)
 Check that the credit note has been
processed timeously.
 Check that the credit note has been
approved.
Upliftment on another day
 Same procedures as above including
 Obtain the upliftment note approved by
the sales representative for stock to be
uplifted.
 Check that the upliftment note has been
signed by a Company Name (site)
representative as evidence of receipt of
the stock.
 Check that the customer has signed the
upliftment note as evidence of returning
the stock.
 Check that the upliftment note agrees to
the credit note processed.
Pricing credit notes
Select a sample of 10 pricing credit notes
processed for the period under review.
 Obtain the deal sheet applicable to the
invoice for which a pricing claim was
raised.
 Obtain a printout of the invoice.
 Determine the date of the order. At the
date of the order, for the product
selected, was the price a reflected on the
invoice evident on the deal sheet.
 Check whether the price being claimed
by the customer is evident on the deal
sheet.
 Determine the validity of the pricing
claim.
 If the claim in invalid – determine who
approved the supporting documentation
for the pricing credit note to be
processed.
 If the claim is valid – determine the root
cause i.e. was the price captured
incorrectly, was the price captured late,
was the deal sheet received late etc.
 Check the reason code per supporting
documentation agrees to the reason code
per the system.
 Check that the pricing credit note was
processed prior to month end – (here
they have an accrual account – chat to
Iresh – call me where you have these

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exceptions).
 Obtain monthly exception reports – are
trends analysed? What action is taken?
 Check that the credit notes have been
approved. Note name and job title.

Program objective – Debtor journals

 To check the accuracy, validity and completeness of debtor journals.

Risk Audit procedures Completed WP

by and date reference
 Unauthorised Obtain the debtor journal reports for the
debtor journals period under review.
processed. Select a sample of 20 debtor journals.
 Debtor journals  Agree the debtor journal to supporting
processed documentation.
inaccurately.
 Check that the supporting documentation
has been approved.
 Check that the journal has been
processed timeously.
 State the reason for the debtor journal.
 Check that a journal narrative has been
documented.
 Check that the journal is pre-numbered.
 Check that a journal voucher has been
completed.
Obtain the debtor journal listings.
 Check that the journal listings have been
subject to an independent review on a
monthly basis.

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 Program objective – Debtor age analysis
 To check that there is adequate follow up performed on a monthly basis of all outstanding debtors.
 To check the accuracy of the ageing of the debtors accounts.
 To check that credit balances are correctly reflected.
 To verify the validity of the debtors reflected on the debtors age analysis.

Risk Audit procedures Completed WP

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 Long Follow up
outstanding  Obtain the latest debtors age analysis.
debtors that
become bad  Document who is responsible for
debtors. following up on outstanding amounts.
 Accounting  Select a sample of 20 debtors who have
records amounts outstanding – focus on those
inaccurate due with amounts that are long outstanding.
to inaccurate  Determine what follow up action has
ageing. been taken – ensure that there is
 Loss of income evidence of this follow up action been
due to taken i.e. notes made on the debtors age
outstanding analysis.
amounts not  Check that there is evidence of review
received. by the National Credit Manager and/ or
Credit Managers on a monthly basis.
 Note all credit limits that have been
exceeded – what is the reason for this.
 Obtain reasons for intercompany
balances, zero balances, unlimited credit
limits, balances in credit.
 Credit balances – obtain a printout of
what these balances are made up of.
Select one credit note and obtain – is the
balance correctly reflected.
Ageing
 Select a sample of 5 debtor invoices and
5 credit notes.
 Check that the ageing has been
performed correctly.

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 Program objective – General ledger reconciliations
 To check that the general ledger debtor account reconciliations are performed and reviewed on a
monthly basis and that there are no long outstanding reconciling items.

Risk Audit procedures Completed WP

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 Reconciling Obtain a list of the trial balance and
items are not determine which general ledger
detected and reconciliations are performed for debtors.
followed up  Determine that the reconciliations have
timeously. been prepared on a monthly basis.
 General ledger
 Check that the reconciliations have been
balances
subject to an independent review.
reflected
incorrectly.  For the latest reconciliation –
 Invalid - Agree to the GL
transactions - Agree to supporting schedule from
remain debtors module i.e. age analysis.
undetected. - Agree reconciling items to supporting
documentation.

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