1. Introduction
In this project, we will focus on the revenue cycle of PT. NAGA BHUANA ANEKA PIRANTI Company that is an important process in a business cycle. Without sales, the company will not get any profit, and will eventually thrive to bankruptcy. When a company does not have a decent internal control system and there are many gaps in there, the employees will started to take chances and thus may drives the company into huge losses.
Here, we will cover the process from receiving the customer’s orders, determining the availability of the goods, shipping the goods, billing the customers, collecting the cash, and recognizing the effect on related accounts. Finally, this report will deliberate how PT. Naga Bhuana deals with its sales and …show more content…
The internal control analysis will based on the six categories of physical control activities specified in SAS 78/ COSO internal control.
• Segregation of duties: PT. Naga Buana Aneka Piranti has applied segregation of duties within its sales order process. The first example is the storing of asset is separated from the recording for the accounting purpose. Inventory is the asset of the company which is stored in the warehouse. In the other hand, the recording for the quantity of the inventory is performed by the inventory control department. If the process is combined in one department, it will be easier for the employees to do fraud such as, the employee can steal the inventory and alter the inventory levels by themselves.
The company also differentiate the department who is responsible for the accounting records. The recording of subsidiary ledger for accounts receivable will be performed by the accounting department whereas the recording for inventory will be done by the inventory control department.
• Supervision: …show more content…
Naga Bhuana do not have any Credit department that is responsible for credit checking for their customers who need to take credit when making order. In this company, credit is checked by sales people, not a separated Credit department. The reason behind this decision is to minimize the company’s labor cost. However, this could lead to sales people approving high risk orders from customers in order to reach company’s sales target and shows lack of proper authorization.
The Accounting departments is the one who perform all of the accounting function, such as the records of inventory, account receivable, and general ledger. This decision is also to reduce the company’s cost for hiring more employees. However, it can increase the chances of fraud or inappropriate record.
In Shipping department, there is no shipping records that specifies orders shipping during the period, which can increase errors occurred in the management. However, the shipping department has effectively working in verifying the products type and quantity. Some documents are also reconciled before the products are sent from warehouse to the
In this project, we will focus on the revenue cycle of PT. NAGA BHUANA ANEKA PIRANTI Company that is an important process in a business cycle. Without sales, the company will not get any profit, and will eventually thrive to bankruptcy. When a company does not have a decent internal control system and there are many gaps in there, the employees will started to take chances and thus may drives the company into huge losses.
Here, we will cover the process from receiving the customer’s orders, determining the availability of the goods, shipping the goods, billing the customers, collecting the cash, and recognizing the effect on related accounts. Finally, this report will deliberate how PT. Naga Bhuana deals with its sales and …show more content…
The internal control analysis will based on the six categories of physical control activities specified in SAS 78/ COSO internal control.
• Segregation of duties: PT. Naga Buana Aneka Piranti has applied segregation of duties within its sales order process. The first example is the storing of asset is separated from the recording for the accounting purpose. Inventory is the asset of the company which is stored in the warehouse. In the other hand, the recording for the quantity of the inventory is performed by the inventory control department. If the process is combined in one department, it will be easier for the employees to do fraud such as, the employee can steal the inventory and alter the inventory levels by themselves.
The company also differentiate the department who is responsible for the accounting records. The recording of subsidiary ledger for accounts receivable will be performed by the accounting department whereas the recording for inventory will be done by the inventory control department.
• Supervision: …show more content…
Naga Bhuana do not have any Credit department that is responsible for credit checking for their customers who need to take credit when making order. In this company, credit is checked by sales people, not a separated Credit department. The reason behind this decision is to minimize the company’s labor cost. However, this could lead to sales people approving high risk orders from customers in order to reach company’s sales target and shows lack of proper authorization.
The Accounting departments is the one who perform all of the accounting function, such as the records of inventory, account receivable, and general ledger. This decision is also to reduce the company’s cost for hiring more employees. However, it can increase the chances of fraud or inappropriate record.
In Shipping department, there is no shipping records that specifies orders shipping during the period, which can increase errors occurred in the management. However, the shipping department has effectively working in verifying the products type and quantity. Some documents are also reconciled before the products are sent from warehouse to the