internal check as regard of sales in auditing

Since the chance of cash sales fraud Is bigger , it requires the

development of internal systems and effective an examination
Sales organization is dependent on the system Sales and distribution
of goods . Unless the organization of the sector
Correct inhibit sales and greater possibilities Account manipulation.
Goods can also be diverted . Accordingly , a
Strict internal inspection system is necessary , which may be in
As follows :
(a) Sales at the counter:
(i) Preparation of cash memo in triplicate by Salesmen, the
original and duplicate copies being handed over to the cus-
tomer and the triplicate retained in the book;

(ii) Payment of cash by the customer along with cash memo (2

copies) to the cashier;

(iii) Marking cash memos as ‘Paid’ by rubber stamp by the cashier

who should hand over them to the customer and record the amount
as a receipt in Cash Register Machine;

(iv) Verifying the total cash sales for the day as per cash register
statement with the cash memos retained by the salesmen and the
gatekeeper.

This system is followed in a big departmental retail stores:

(b) Sales by travelling Salesmen/Agents:
For ‘direct sales’ promotion and collection by them, the-
system should be:
(i) Authorising them to issue money receipt;

(ii) Specifically instructing them to deposit the entire cash collection

daily to the cashier or to company’s bank account;

(iii) Asking them to submit daily report of sales and collection for
bank deposits;
(iv) Strictly advising them neither to keep any collection with them
nor to allow any collection to remain outstanding.

(c) Sales through post:

For this, the system should be:
(i) Maintenance of separate registers for VPP sales, postal sales, and
sales returns for non-acceptance by customers;

(ii) Recording in respect of goods dispatched/received from stores/

returned to stores, cash received against sales, expenses on postage
for dispatches, etc.;

(iii) The person dispatching goods should not receive cash;

(iv) Accounting of cash in the Cash Book and deposit thereof in the
bank;

(v) Accounting and adjustment of advances to avoid double

dispatches.

(d) General Checks:

(i) Verification and accounting of outstation cheques by reference to
the sales bills;

(ii) Verification of cash or cheque receipts with the Order Receipt

Book to find out un-realised amounts, if any; and

(iii) Preparation of Bank Reconciliation Statement by the cashier to

confirm bank balance.

2. Credit Sales:
(i) Separation of sales department from the despatch department;

(ii) Functional sub-divisions, e.g., receiving orders, accounting of

goods supplied, invoice preparation, etc. within the dept.;

(iii) Recording of all customers’ orders serially in the book;

(iv) Endorsement of customers’ orders to the despatch dept.;

(v) Authorisation by a competent official as regards terms of sale,
discount allowed, bad debts write-offs;

(vi) Verification of invoices against orders executed with the orders

received prior to despatch;

(vii) Preparation of invoices in triplicate and matching the third

copy with the duplicate received from the customer duly signed for
the goods received;

(viii) Daily verification of the Goods Outward Book (containing

entries for goods supplied to customers) with the Order Book and
the Invoice Book;

(ix) Maintenance and checking of the Sales register written up from

invoice copies; and

(x) Periodical follow-up measures on the collection of customers’

accounts.