Question

Revenue Process Misstatements

The revenue cycle requires regular review. Identify at least two (2) types of misstatements found in the revenue process. Next, identify a sound, timely internal control to detect and correct this misstatement.

Answer 1

S. No.	Misstatements	Control to detect and correct misstatement
1	The quantity of sale as per accounting system (SAP,Oracle etc.) does not match with the quantity entered into the manual invoice	There are 2 internal controls which could overcome both deficiencies : 1. Automated Invoices : Automated invoices should be generated by the system and there should be an preparer and approval process which means that a lower level employee in the finance team should prepare the invoice in the system and the Manager-Finance should approve the same in system. This invoice should be downloaded by the sales team from the system and the sales team should get the same signed from the customer. 2. Manual Invoice Approval : The manual invoice should be prepared by a lower level member of the Finance team and such invoice should be approved by Manager-Finance before handing over the invoice to sales team to get it signed from the customer.
2	Price of the products as per the approved price master in the accounting system does not match with the price of the products entered into on the manual invoice.