Question

The revenue cycle affects the bottom line of the business critically. Hence, there are many threats that could derail a successful cycle. Describe 5 threats that may hinder this sequence and its compensating controls for each threat. My question is what are the four PROCESSES for this question? And how does it relate to AIS. I do not need the answer for the threats but i do need the 4 processes.

Answer 1

The 5 threats that may hinder this sequence are:

1. Sales to clients with poor credit.
2. Stock outs.
3. Failure to charge clients and Billing mistakes.
4. Theft of money.
5. Posting blunders in refreshing records receivable.

The threats are explain in detailed below:

1) What great deals can do in the event that they are not ready to create money streams and simply more turn bad, the organization wouldn’t ready to emerge any income if the customer has a poor reputation and is unable to pay Controls: Having a free credit endorsement work and keeping up great client bookkeeping can avert issues.

2) Conveying expenses and markdowns are a danger in the business arranges passage process. The issue with stock outs is that when products are not accessible to ship to clients, the business dangers losing the deal to a contender that can give the merchandise in an opportune way. The contrary issue can likewise happen where overabundance stock increments conveying costs, with the outcome that markdown might be vital so as to offer the stock. Two controls can be executed to adapt to this danger. One control that can be instituted is to build up exact stock control. Periodic physical checks of stock will likewise confirm the unending sums recorded by the AIS. Another imperative control in this circumstance is that of precise deals gauging. Appropriate showcasing endeavours ought to be made related to frequently assessing deals estimates for exactness.

3) Making deals without issuing a business receipt or issuing a deal receipt with a sum not as much as the sum acquired, and so forth indicate misrepresentation in the company. The incomes get affected thusly Controls: Separating transportation and charging and pre-numbering of delivery reports helps alongside compromise of all business records , Reconciliation of picking tickets and bills of filling with deals orders; information section alter controls; and value records may forestall charging blunders.

4) Segregation of obligations is basic to keep this major issue (the accompanying obligations ought to be isolated: taking care of money and presenting on client accounts; taking care of money and approving credit reminders and alterations; issuing credit notices and keeping up client accounts); utilization of lockboxes for receipts and EFT for payment; mailing client articulations month to month; utilize trade enlists out retail tasks where money instalments are gotten; store trade day by day out the bank; and have the bank compromise work performed by free outsiders.

5) Hiring of expert for upkeep and refreshing the records is vital on the grounds that an organization should know its indebted individuals for legitimate recovery and reconciliation of records Controls: Use of altering and clump aggregates is basic here.

If you satisfied with my awnser. Please rate me.

Thank you.