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made
to 
authorised suppliers
.
 

Orders
are 
made 
at
 competitive prices
. 
Receipt and 
invoices

Goods and services 
received are 
used 
for the 
organisation's purposes 
and not 
private purposes. 

Goods and services
are 
only accepted
if they have been 
ordered
, and the 
order
has been authorised. 

All 
goods
and
services received
are accurately 
recorded
. 

Liabilities
are 
recognised
for all 
goods and services
that have been 
received
. 

All 
credits 
to which business is due are 
claimed
.
 

Receipt 
of goods and services is 
necessary
to 
establish
a 
liability
. 
Accounting

All expenditure is authorised and is for goods that are actually received.

All expenditure that is made is recorded correctly in the general and payables 
ledger. 

All credit notes that are received are recorded in the general and payables 
ledger. 

All entries in the payables ledger are made to the correct payables ledger 
accounts.

Cut-off is applied correctly to the payables ledger. 
6.2.3 Controls 
The purchasing system tests will be based around:

Buying 
(authorisation) 

Accounting 
(recording) 

Goods inwards (custody) 
BPP Tutor Toolkit Copy

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PART C: ACCOUNTING AND REPORTING SYSTEMS, CONTROLS AND COMPLIANCE 
 
222
 
6.3 Controlling the sales cycle 
Like the purchase cycle, the sales system tests will be based around:

Selling 
(authorisation) 

Accounting 
(recording) 

Goods outwards (custody) 
For sales, businesses want to give credit only to customers who will pay their debts. The processes of 
handling sales, matched orders, despatching goods and invoicing all need to be 
documented
and 
matched
, so that customers receive what they ordered and are correctly billed. The 
receivables ledger
makes it possible to keep track of what is owed by each customer. 
6.3.1 Receivables ledger system 
There are a number of controls which need to be in place over sales and receivables. Bear in mind that, 
quite apart from safeguarding actual transactions, there must be no possibility of turnover figures being 
falsified. A number of people may have bonuses and commissions based on them! 
The most important aims of the control system relating to receivables and sales are these: 
Feature 
Aims 
Ordering and 
granting of credit

Goods
and 
services
are 
only supplied
to 
customers
with 
good credit ratings
. 

Customers
are encouraged to 
pay promptly
.

Orders
are 
recorded correctly
.
 

Orders 
are
 fulfilled
. 
Despatch and 
invoicing

All 
despatches
of goods are 
recorded
.

All