Threats and Controls in the Expenditure Cycle Essay
There are four activities in revenue cycle namely; sales order entry, shipping, billing and cash collection. The table below shows the activities and the related actions to be conducted by company employees:- Revenue cycle activities | Activity | Sales Order Entry | Process orders from customers | Shipping | Deliver merchandise or services to customers (outbound logistics) | Billing | Send invoices to customers | Cash Collections | Process payments from customers |
PBL Session 2 Question b:
In expenditure cycle, the four activities conducted are ordering materials, supplies, and services, receiving materials, supplies, and services, processing invoices and cash disbursements. The table …show more content…
The table below show general threats that may be experienced by Proterm Automobile Sdn Bhd & the related mean of controls:- Threats | Controls | Inaccurate & invalid master data | * Employ data processing integrity controls * Restrict access to master data * Produce report and review all changes to master data | Unauthorized disclosure of sensitive information | * Employ strong access controls * Encrypt sensitive data | Loss or destruction of master data | * Employ backup and disaster recovery procedures | Poor performance | * Constantly produce managerial reports |
Expenditure cycle activities comprise of ordering, receiving, approving supplier invoices and cash disbursements. Each activity may be exposed to several threats; therefore Proterm Automobile needs to know the proper means of control for each threat.
In the activity of ordering materials, supplies and services, the first threat may be experienced by Proterm Automobile is inaccurate inventory records which may lead to