SUBSTANTIVE PROCEDURES
REVENUE AND RECEIPTS CYCLE
Assertion Sales(COT) Trade receivables (AB)
Occurrence/Existence Obtain /request for the sales Obtain a sample of debtors
(from ledger to ledger download from the debtors’ ledger.
source Trace a sample of recorded Circulate an external
documents/physical sales transactions back to confirmation to the sampled
asset) source and inspect the debtors.
supporting documentation If the confirmations are not
e.g. the invoice, to confirm : returned, perform subsequent
that an order was received receipt testing.
from an approved customer Trace the year-end balance of
That a picking slip and the debtors to the payments
despatch note for the goods received from the debtors
invoiced, duly signed by the after year-end and the
picker and despatcher and customer remittance advice.
that the goods invoiced to the
customer were of a type sold
by the company.
Trace each sale in the sample
through to the cash receipts
journal/bank statement and
customer remittance advice
and by inspection, determine
whether a payment of the
correct amount for each
invoice.
Inspect the bills of lading for
goods sold on FOB or CIF to
determine whether
significant risks and rewards
of ownership have been
transferred from the seller to
buyer
Accuracy/Valuation Select a random sample of Gross amount
and allocation invoices and for each invoice The debtors ledger should be
confirm the mathematical reviewed for unusual entries
accuracy of the invoice by e.g. credit balances The total
recalculating all extensions, on the list of individual
casts, discounts and VAT debtors should be matched to
calculations the debtors control account in
Confirm prices and discounts the general ledger and the
charged and granted to trial balance
official price lists or other Reference should be made to
sources Confirm that the the results of any external
invoice is a valid tax invoice confirmations received
REVENUE AND RECEIPTS CYCLE
Assertion Sales(COT) Trade receivables (AB)
Occurrence/Existence Obtain /request for the sales Obtain a sample of debtors
(from ledger to ledger download from the debtors’ ledger.
source Trace a sample of recorded Circulate an external
documents/physical sales transactions back to confirmation to the sampled
asset) source and inspect the debtors.
supporting documentation If the confirmations are not
e.g. the invoice, to confirm : returned, perform subsequent
that an order was received receipt testing.
from an approved customer Trace the year-end balance of
That a picking slip and the debtors to the payments
despatch note for the goods received from the debtors
invoiced, duly signed by the after year-end and the
picker and despatcher and customer remittance advice.
that the goods invoiced to the
customer were of a type sold
by the company.
Trace each sale in the sample
through to the cash receipts
journal/bank statement and
customer remittance advice
and by inspection, determine
whether a payment of the
correct amount for each
invoice.
Inspect the bills of lading for
goods sold on FOB or CIF to
determine whether
significant risks and rewards
of ownership have been
transferred from the seller to
buyer
Accuracy/Valuation Select a random sample of Gross amount
and allocation invoices and for each invoice The debtors ledger should be
confirm the mathematical reviewed for unusual entries
accuracy of the invoice by e.g. credit balances The total
recalculating all extensions, on the list of individual
casts, discounts and VAT debtors should be matched to
calculations the debtors control account in
Confirm prices and discounts the general ledger and the
charged and granted to trial balance
official price lists or other Reference should be made to
sources Confirm that the the results of any external
invoice is a valid tax invoice confirmations received
