Four (4) examples of Revenue Cycle Activities :

DEFINITION : Revenue cycle is a recurring set of business activities and related information
processing operations associated with providing goods and services to customers and
collecting cash in payment for those sales.

PURPOSE / OBJECTIVE :

Provide the right product in the right place at the right time for the right price.

ACTIVITIES / TYPES :

1. Sales order entry

- Process of taking the customers order, checking and approving customer credit
and also checking inventory availability of the order.
- All of these processes are recorded in the sales order document.
- The document is usually an electronic form displayed on a computer monitor
screen.
- By using a computer monitor screen, it can lead to a threat during sales order such
as the important data about the order will be either missing or inaccurate.
- This can be preventing by using Enterprise Resources Planning (ERP) system by
using a variety data entry edit control.
- For example, complete checks on the data in order to make sure all of the data are
entered.
2. shipping
- Which refer to fill customer orders and shipping the desired materials of the
customer orders.
- It involves two steps which are picking and packing order and shipping the order.
- One potential threat that can be incurred during the process is the risk of picking
the wrong items or in the wrong quantity.
- This problem can be avoided by using bar-code and RFID scanners. This is
because, the system can compare the items and quantities recorded with the
information on the sales orders.
3. Billing customer.
- The primary objectives of the billing are to ensure that customers are billed for all
sales that invoices are accurately maintained.
 - The main threat for this activity is failure to bill the customers that will result in
erroneous data about the sales, inventory and accounts receivable.
- This threat can be control by do a segregation duties regarding the shipping and
billing function.

4. Cash collections or collecting and processing payments from customers.

- The primary objective of this activity is to safeguard customer remittances.
- Since it involves cash, therefore, the main threat is theft of cash.
- Segregation of duties is also the most effective control procedure to reduce the
risk of such theft.

Four (4) examples of Expenditure Cycle Activities :

DEFINTION: Expenditure cycle consists of the processes a company undergoes to determine

the materials needed and the costs of those materials to produce a finished product.

TYPES/ EXAMPLE :

1. Ordering goods, suppliers and service

- Is the process that involve identifying what, when, and how much to purchase and
from whom to purchase.
- One of the threats of this process is purchasing goods of inferior quality.
- This risk can be reduce by requiring suppliers to possess quality certification and
collecting and always monitoring supplier delivery performance in order to make
sure the goods that they produce are in high quality.
2. Receiving and storing of ordered items.
- This process incurred when the deliveries from suppliers are arrived.
- The general threat is by accepting unordered items that will results in cost
associated with unloading, storing and later returning those items.
- The best control procedure that can be used is to instruct the receiving department
to accept only deliveries for which there is an approved purchase order.
3. approving supplier invoices for payment
- One threat that can be occur is errors on supplier invoices,
- For example, miscalculations of the total amount due.
- This problem can be prevented by verification of the invoice accuracy in order to
make sure the amount or quantity in the invoice is correct.

4. cash disbursement
- Is the activity of settling a debt by paying for the goods and services received
completes the expenditure cycle.
- The risk that occurs in this cash disbursement is paying for goods that not
received.
- The best ways to prevent the risk is by make a comparison between the quantities
indicated on the vendor invoice with the quantities entered by the inventory
control person, who accept the transfer of those goods from the receiving
department.