Account Department - Internal Audit

The job functions of Internal Audit within a company includes the following:

1. Stock Taking

To perform this function, the user could click INVENTORY -> STOCK REPORTS -> STOCK BALANCE BY CATEGORY.

With this report, the user will be able to print stock balance with quantity, and this quantity is used to check against the real stock balance at the store, branches or outlets.

All shortages should be "invoice" out to a logical customer account, typically called "Stock Loss Account". Stocks with excess quantity should be "GRN" from a supplier called "Excess Stock".

Typically, for companies that do not use bar codes at their point of sales, the shortages and excess in stock quantity could be due to the cashiers keying in the wrong item codes while issuing bill. It is also possible that these are caused by pilferages or theft etc. A well run company should have clear policies and procedures on standard treatment for different kind of situations.

When issuing invoice, if the selling price is set to ZERO, the GRN price of excess stock should also be zero. This way, it will not change the stock balance figure, and at the same time does not boost the sales figure inappropriately.

If stock loss are considered sold to the person in charge, then list price or cost price could be used while issuing invoice. These invoices will remain outstanding until it is paid/settled by the person in charge.

2. Checking Sales Return

Sales Return are normally created under the following scenario:

a) Customer return faulty goods

b) Customer exchange the goods for something else

c) Cashier key in the wrong item code for an invoice

d) Cashier key in the wrong price for a specific item code

e) Invoices or cashsales are cancelled

f) Fraud

The internal audit should always be sharp to tell if a sales return was created due to which reason above.

3. Checking Reverse Receipt

Reverse receipt could be a result of the following:

a) Cashier entered the payment mode wrongly (e.g. Cash entered as credit card, and different card payment mode was selected, or wrong cheque number etc)

As Receipt is the source document for all money collected, when a cash bill is printed, and receipt is subsequently reversed, the cash bill (invoice component) will be shown as outstanding in the CUSTOMER -> MONITOR OUTSTANDING DOCUMENT. However, this report may not be generated by the person in charge of cashiers collection, and a receipt that has been reversed will not show in reports used for daily closing when tying the figures/reports to the cashiers' cash collections, there may be possibilities of negligence or fraud.

To see the list of receipts that have been reversed, click CUSTOMER -> OFFICIAL RECEIPT LISTING, or TRADING -> DAILY CASHIER COLLECTION REPORT.

4. Checking Reverse Payment

All payments could only be generated with Payment Vouchers. Money paid out will deduct the cash from corresponding cash book. As reverse payment will reverse out all corresponding cash movement in these cash books, if reverse payment is not monitored carefully, fraud could happen easily.

To view Payment Voucher listing, click FINANCE -> PAYMENT VOUCHER -> LISTING, all payment vouchers that have been reversed will be displayed with "HORIZONTAL STRIKE".

5. Looking at Invoices with Negative Margin

Invoice or cash sales with negative margin should be monitored closely. A few reasons:

a) Mistake in keying the selling price

b) Selling items to related parties (fraud)

c) Selling obsolete stock below cost

d) Special promotion

The internal audit person should be able to identify the reason for selling below cost.

6. Looking at audit trail to look at irregular activities

From SYSADMIN -> AUDIT TRAIL, one can observe all activities happening in the system. However, too much information will render those information useless. Some of the things to look out:

a) User change their default branch - User could be changing this to sell stock in other locations, while pocketing the collections

b) Irregular login time - User may be accessing the system in the middle of the night or locations

7. Checking Stock Variance (Reset Moving Average Stock Values)

In order to better manage and control all changes made to the cost of inventory, management could make use of the following reports:

INVENTORY -> STOCK REPORTS -> STOCK ADJUSTMENT BY RESET MOVING AVERAGE