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Help me end an increasingly heated debate...

A colleague and I work for a large retailer checking that all of the promotional income has been billed and collected. (In this circumstance, promotional income is money received from our suppliers for promoting their products in store.

We are in the process of designing a new system for our team and are increasingly arguing about which direction the system should take.

The process for agreeing and getting promotional income is:

1)      Buyers agree the deal and confirm on email with the vendor

2)      The deal should be entered into a promotions database

3)      The promotions database is used by another team to raise invoice requests

4)      The invoice requests are used by the sales ledger team to raise invoices and post the double entry

One of us wants to start our work at point 2) and work forward to 4), one of us wants to start our work at point 4) and work to point 1)

What would you do?

Steve

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I guess your role then is much as an internal auditor. 

I would say that the work should start at the widest base which is point 1 or 2.

The narrowest base is point 4 because all potential income may not be invoiced.

The risk with starting at point 4 is that you will not pick up this potential income which has not been invoiced so it is hopeless working backwards. That way only proves the system works for those particular invoices

 

 

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In order to check for completeness of income, you need to start at a point which is quite early in the system.

Once the supplier has agreed the deal and confirmed by e-mail, this is entered on a database. I would say that you must check from this list through to sales invoices and bank receipts, to make sure that in respect of all contracts agreed by the supplier, we have billed them and received the money.

So it is (2) through to (4).

Incidentally, you should also check from (1) to (2), to ensure that all agreed deals have indeed been entered on the database.

HTH

SA

 

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2 to 4

If the aim is to check that all promotional income has been billed and collected you can really only start at 2 and work to 4. If you start at 4 and work back to 2 it will provide a systems check but not really a completeness check as you are only checking on something that has already has an invoice requested, therefore you would miss any work that hadn't had an invoice request.

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BODFUC

Backwards for Overstatement of Debits, Forwards for Understatement of Credits.  That's all I can remember from my auditing days.

1 -> 4, you need to start with the agreements, which might not all have been entered on the database.

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Clearly the others are right ...but .....

As a snotty nosed little audit clerk it wasn't unknown to take the opposite approach if time or budget were disappearing quicker than the audit schedule ticks!! 

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Thank you everyone!

I am delighted to report that lunch is on my colleague!

 

Regards

 

Steve

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How was lunch?

Hope you had a steak!!!

:)

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How was lunch?

Craigie_Bhoy wrote:

How was lunch?

Hope you had a steak!!!

:)

 

Pizza Hut all you can eat buffet! and I really filled by boots thank you very much!

 

Bit sleepy now though.

 

Steve

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no harm to you Steve but this reminds me why I hated auditing :(

good luck though!

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