Order Processing

Control Objectives for Order Processing

(a) To ensure that all valid orders are correctly identified, accounted for and
processed in accordance with the organisation's policies and procedures;
(b) To ensure that official orders are only accepted from bona fide, authorised
and suitable customers;
(c) To ensure that orders are only accepted for credit worthy customers with
sufficient available credit limit;
(d) To ensure that new customers are properly assessed and authorised for set
up with an appropriate credit limit;
(e) To ensure that the determination and amendment of credit limits is
appropriately authorised;
(f) To ensure that effective credit control is exercised to ensure that
customers accounts are promptly followed-up and payments obtained;
(g) To ensure that all order details are accurately captured for subsequent
processing purposes;
(h) To ensure that all affected functions are coordinated so that the order is
promptly and efficiently fulfilled;
(i) To ensure that orders are promptly and accurately acknowledged;
(j) To ensure that delivery and any other special customer requirements are
identified and appropriately addressed;
(k) To ensure that all orders are promptly fulfilled, delivered and confirmed as
received;
(l ) To ensure that invoices are raised against all fulfilled orders and accounted
for within the accounts receivable system and accounts;
(m) To ensure that the correct terms, prices, and discounts are reflected on
subsequent invoices;
(n) To ensure that key data (i.e. product prices, order records, etc.) is
adequately protected from unauthorised access and amendment;
(o) To ensure that export orders are handled in accordance with all the
prevailing regulations; and
(p) To ensure that all the current laws and regulations are correctly and fully
observed.

Risk & Control Issues for Order Processing

1 Key Issues

1.1 What measures ensure that all orders (from all possible sources) are
correctly identified, logged, reviewed, authorised to proceed, and accounted
for?
1.2 What measures prevent the acceptance of orders based upon invalid
or unauthorised terms and conditions (i.e. those outwith the defined
company policies)?
1.3 What measures are applied to ensure that only orders from
established, authorised, bona fide customers are accepted?
1.4 What mechanisms prevent the acceptance and processing of orders
from customers with either an outstanding/overdue balance due on their
account or with insufficient authorised credit remaining?
1.5 How does management assess new customers for their financial
stability and suitability, etc. (and what measures prevent the acceptance of
inappropriate customers)?
1.6 Are all new customers and the setting of their initial credits limits
subject to suitable authorities?
1.7 How is management assured that credit limits are strictly observed
and only amended when suitably authorised?
1.8 What measures ensure the accurate capture of order data?
1.9 What mechanisms ensure the appropriate coordination of the
following functions in the correct and prompt processing of customer
orders?:-
- sales
- production
- stock control
- export dept.
- accounts receivable
- credit control
- despatch/distribution
- after sales support, etc.
1.10 What measures ensure that all orders are acknowledged and
efficiently fulfilled?
1.11 How is management assured that accurate invoices are raised and
accounted for within the accounts receivable system?
1.12 How does management ensure that all export orders are correctly
processed and handled in accordance with all the prevailing regulations?
1.13 What measures are in place to ensure that all the relevant legislation
and regulations are correctly observed?

2 Detailed Issues

2.1 Have authorised and documented policies been established for the
following?:-
- new customer acceptance;
- setting credit limits;
- credit control;
- pricing and discounting;
- standard terms/conditions;
- export sales procedures.
2.2 How is compliance with all the authorised policies assured?
2.3 Are accurate and reliable records of authorised existing customers
maintained, and how are they protected from unauthorised access and invalid
amendments?
2.4 What form of assessment and verification are applied to new or potential
customers to confirm their acceptability?
2.5 What measures prevent the set-up of a customer record when the required
assessment and credit checks have not been applied?
2.6 Are procedures in place governing the determination and amendment of
credit and trading limits, and how can management be sure that they are always
correctly complied with?
2.7 What mechanisms prevent the acceptance of an order where the customer
has previous accounts overdue for payment?
2.8 Are measures in place to identify and cater for any special customer
requirements (i.e. specific delivery dates, modified specification, etc.)?
2.9 What measures are in place to accurately identify the status of all orders
and highlight those outstanding for delivery?
2.10 What processes would identify and accordingly progress outstanding
orders?
2.11 Are all deliveries accurately recorded and documented as either received
or rejected (in whole or in part)?
2.12 What procedures link orders delivered to the accurate generation of the
relevant invoices?
2.13 What mechanisms ensure that the correct, appropriate and authorised
details (i.e. prices, discounts, quantities, terms, etc.) are reflected on invoices?
2.14 What processes prevent the delivery of an order without the generation
of the relevant invoice?
2.15 What measures protect key data (such as prices, discounts, order records,
invoice records, etc.) from unauthorised access and amendment?
2.16 Are all invoices correctly and accurately accounted for on the customers
debtors accounting record?
2.17 What measures ensure that all invoices are promptly despatched to
customers?
2.18 In order to prevent staff malpractice and fraud, are key duties adequately
segregated?
2.19 Are management provided with adequate, accurate and timely
management information about orders received and in progress, etc.?
2.20 How is the accuracy of data input from other systems ( i.e. agencies or
stock control) confirmed?
2.21 How is the accuracy of data output to other systems (i.e. distribution or
account receivable) confirmed?