Link to article:
https://journal.binus.ac.id/index.php/JAFA/article/view/125
For the discussion purposes this week, I researched and found the
article “The Analysis of Internal Controls on Revenue and Expenditure
Cycle in PT. Levina”. Instead of isolating one area of the accounting
cycle, this article touches on two of the three areas. a PT. Levina is a
major player in the wedding industry in Jakarta that provides catering
services and one-stop wedding services. a PT. Levina’s revenue cycle
includes receiving orders, informing customers of order details,
shipping goods, then 30 days later goods and services are billed out
to the customer. a The following month includes cash collection and
then the record of the sale in the general ledger. PT. Levina’s
expenditure cycle begins with a budget being established, a bill of
material being created, the purchase of raw materials, confirmation of
receipt of goods and payment of purchases, and lastly the recording
of the purchase in the general ledger. All ordering and transactional
activities are completed and recorded within PT. Levina’s accounting
information system. The article mentions that the company has
control weaknesses specifically related to internal control including
organizations, documentation, asset accountability, management
practices, and authorization controls. Authorization controls have an
integral role in the expenditure cycle because any weaknesses may
impact the efficacy on accuracy of the cycle. The weaknesses that
were identified were related to proper authorization for purchase
transactions for goods and services and insufficient documents such
as purchase requisitions, purchase orders, and receiving reports.
Asset accountability control weaknesses have an impact on the
expenditure cycle because weaknesses regarding the confirmation of
asset purchases and separation of duties for staff members who
handled ordering, purchasing, receipts, and delivery of goods directly
conflicts with their job of also monitoring inventory and recording
invoices.
References
Ariesa, Leonny & Berasategu, Reuben Garcia. "The Analysis of
Internal Controls on Revenue and Expenditure Cycle in PT. Levina."
Journal of Applied Finance & Accounting, 1, 2, 2009, 268-280.
