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. PT.
Levina is a major player in the wedding industry in Jakarta that
provides catering services and one-stop wedding services. b 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. b The following month
includes cash collection and then the record of the sale in the general
ledger. b 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. b 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.
