Big4Guy

For the purposes of Section 404 of the Sarbanes Oxley Act, Control Objectives represent objectives of internal control over financial reporting. Key control activities supporting these control objectives need to be tested periodically to ensure that they have been designed properly and are operating effectively. I have received a lot of request ove the past few months from readers asking me to collate business control objectives for Sarbanes Oxley by cycle. While it is difficult to write all control objectives for a particular business cycle, since they may vary from organization to organization.

I am attempting to put together a illustrative list of control objectives. Today, I am discussing control objectives for the Order to Cash Sales cycle. Below, you can find the control objective and the financial statement assertion the address.

Control Objectives Sales Cycle - Financial Statement Assertion

1. Orders are processed only within approved customer credit limits - Valuation
2. Orders are approved by management as to prices and terms of sale - Validity
3. Orders and cancellations of orders are input accurately - Valuation
4. Order entry data are transferred completely and accurately to the shipping and invoicing activities - Valuation, Completeness
5. All orders received from customers are input and processed - Completeness
6. Only valid orders are input and processed -Validity
7. Invoices are generated using authorized terms and prices - Valuation
8. Invoices are accurately calculated and recorded - Valuation
9. Credit notes and adjustments to accounts receivable are accurately calculated and recorded - Valuation
10. All goods shipped are invoiced - Completeness
11. Credit notes for all goods returned and adjustments to accounts receivable are issued in accordance with organization policy - Validity
12. Invoices relate to valid shipments - Validity
13. All credit notes relate to a return of goods or other valid adjustments - Completeness
14. All invoices issued are recorded - Completeness
15. All credit notes issued are recorded - Validity
16. Invoices are recorded in the appropriate period - Valuation, Occurrence
17. Credit notes issued are recorded in the appropriate period - Valuation, Occurrence
18. Cash receipts are recorded in the period in which they are received - Valuation, occurrence
19. Cash receipts data are entered for processing accurately - Valuation
20. All cash receipts data are entered for processing - Validity
21. Cash receipts data are valid and are entered for processing only once - Completeness
22. Cash discounts are accurately calculated and recorded - Valuation
23. Timely collection of accounts receivable is monitored - Valuation
24. The customer master file is maintained - Completeness, Validity
25. Only valid changes are made to the customer master file - Completeness, Validity
26. All valid changes to the customer master file are input and processed - Completeness,
Validity
27. Changes to the customer master file are accurate - Valuation
28. Changes to the customer master file are processed in a timely manner - Completeness,
Validity
29. Customer master file data remain up-to-date - Completeness, Validity

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