08 - intro to business processes
TRANSCRIPT
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Introduction to Business Processes and Internal Controls
Presentasi Untuk Mahasiswa PPAk UITheodorus Djoko Sutrisno
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Slide 2
Objectives• Describe a business process. • Explain the importance of a business process
in managing a company. • Describe the flow of transactions and
processes within the revenue business cycle. • List the typical business cycles of a
manufacturing company. • Describe the relationship of specific accounts
to particular business cycles.
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Slide 3
Objectives (cont’d.)
• Describe the components of a business cycle.
• Explain the control environment and its importance in relation to the business cycles and the audit engagement.
• Explain internal controls and their relationship to the revenue cycle.
• Describe basic internal control concepts and tests of controls.
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Slide 4
Business Processes
A refreshment standA refreshment stand•Business Objective:Business Objective: To fulfill a customer To fulfill a customer order for hot food.order for hot food.
•Business Process:Business Process: The process would The process would involve four main steps, as follows:involve four main steps, as follows:
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Slide 5
Fulfilling an Order for Hot Food
Cook food
Take customer’s
order
Receive payment from
customer
Give food to customer
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Slide 6
Selling a CarGreet Customer
Salesperson Locates CarRequested
Sales Contract And Credit
Application Prepared
Identify and Respond to
Customer Needs
Credit Application And Terms of Sale
Approved
VehicleTitle, Financing
Contract, Insurance
Deliver Carto Customer
Sales Summary Generated
Sale is Posted as “Final” into General Ledger
Sale Recorded & Inventory
Reduced
Bill Revenue
Customer File Created& Sales Order
Number Assigned
Credit Dept. Verifies File PriorTo Releasing Car
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Slide 7
Processes and Subprocesses–Process – Fulfilling an order for hot food
–Subprocess – Receive payment from customer
Cook food
Take customer’s
order
Receive payment from
customer
Give food to
customer
Receive payment from
customer
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Slide 8
Subprocess – Receive Payment from Customer•Tasks:–Enter customer’s order into cash register
–Tell total price to customer
–Receive money and place in cash register
–Give appropriate change to customer
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Slide 9
Business Process Objectives•Operational –The customer order is taken correctly
•Compliance–The order is cooked in compliance with food health and safety regulations
•Financial–The money received from customers is recorded accurately
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Slide 10
Receive Payment from Customer
•Business objectives:–The customer is charged the correct amount
–The correct payment is received
–The transaction is recorded accurately
–All such transactions are recorded
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Slide 11
Identifying Risks•Customer is charged correct amount
–Risk: order price is calculated incorrectly•Correct payment is received
–Risk: incorrect change is given to customer•Transaction is recorded accurately
–Risk: Orders are entered incorrectly into register•All transactions are recorded
–Risk: employees keep money instead of placing in cash register
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Slide 12
Control Activities•Risk: price is calculated incorrectly–Control activity: each product sold is assigned a button on the cash register. The total price is calculated automatically.
•Risk: incorrect payment is received–Control activity: at the end of the day, the amount of cash in the register is reconciled to recorded receipts.
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Slide 13
Subprocess – Receive Payment from Customer•Subprocess with tasks and control activities:–Enter customer’s order into cash register–CA: each product sold is assigned a button on the cash register. The total price is calculated automatically.
–Tell total price to customer–Receive money and place in cash register–Give appropriate change to customer–CA: at the end of the day, the amount of cash in the register is reconciled to recorded receipts.
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Slide 14
Subprocess – Receive Payment from Customer•Subprocess with tasks and control activities:–Enter customer’s order into cash register–CA: each product sold is assigned a button on the cash register. The total price is calculated automatically.
–Tell total price to customer–Receive money and place in cash register–Give appropriate change to customer–CA: at the end of the day, the amount of cash in the register is reconciled to recorded receipts.
Automated,
Preventive
Manual,
Detective
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Slide 15
Selling a CarGreet Customer
Salesperson Locates CarRequested
Sales Contract And Credit
Application Prepared
Identify and Respond to
Customer Needs
Credit Application And Terms of Sale
Approved
VehicleTitle, Financing
Contract, Insurance
Deliver Carto Customer
Sales Summary Generated
Sale is Posted as “Final” into General Ledger
Sale Recorded & Inventory
Reduced
Bill Revenue
Customer File Created& Sales Order
Number Assigned
Credit Dept. Verifies File PriorTo Releasing Car
C A
CA
CA
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Slide 16
Link Control Activities to Control ObjectivesControl Activities Control Objectives•Customer credit reviewed and approved.
•Deliveries of cars are confirmed and checked for accuracy before release.
•Term of sale approved. •Orders are approved by management as to price and terms of sale.
•Customer file created and sales order number assigned.
•Orders are recorded in the system and assigned a unique identifier for tracking.
•Finance department verifies file prior to releasing car.
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Slide 17
Link Control Activities to Control ObjectivesCustomer credit reviewed and approved.
Orders are approved by management as to price and terms of sale.
Term of sale approved.Customer file created and sales order number assigned.
Orders are recorded in the system and assigned a unique identifier for tracking.
Finance department verifies file prior to releasing car.
Deliveries of cars are confirmed and checked for accuracy before release.
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Slide 18
Business Cycles …
Are a sequence of activities performed by an entity to process related classes of transactions.
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Slide 19
Typical Business Cycles
1. Revenue
2. Expenditure
3. Treasury
4. Fixed Assets
5. Financial Accounting
6. Inventory Management
7. Payroll and Personnel
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Slide 20
Flow of a Business Cycle
Business Cycle
Principal BusinessActivity
Principal BusinessActivity
Principal BusinessActivity
Control Objective
Control Objective
Control Objective
Control Activity
Control Activity
Control Activity
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Slide 21
Steps in Creating a Business Process•1. Identify your overall B_____ O_______•2. Determine your sequence of T______•3. Identify your C______ O_______.•4. Consider the ______ that these _____ _____ be met.
•5. Design _______ _______ to mitigate these _______.
•6. Insert these _______ _______ into the process.
usiness bjectiveasks
ontrol bjectivesrisk will
notControl activities
risksControl activities
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Slide 22
Control Concepts•What are the different ways you can classify control activities?–Preventive vs. Detective–Manual vs. Automated
•What are the three different types of control objectives?–Financial, compliance, and operational
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Slide 23
Tests of Controls
• Observation• Examination of Documentation• Re-performance• Corroborative Inquiry
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Slide 24Partners in LearningDeloitte Touche Tohmatsu