The evaluated receipts procedure shown in Exhibit 2 incorporates the control points already noted in Exhibit1, with the exception of credit processing and inventory picking activities that were described ear­lier.

The preceding controls are designed for daily evaluated receipts trans­actions. The additional controls that follow are intended to spot problems with the integrity of the overall process flow, and are needed only on an oc­casional basis.

• Audit application of evaluated receipts orders to order entry system. The internal audit staff should verify that incoming purchase orders are properly entered into the order entry system, particularly in regard to how the evaluated receipts flag is set in the customer master file and how information is set up to be printed on the evaluated receipts tag that accompanies the delivery to the customer. This control may in­clude matching the exact requirements specified by each customer for the contents of the evaluated receipts tag to the information on an ac­tual tag at the shipping dock.

Exhibit 2 Procedure for Shipments to Evaluated Receipts Customers

• Audit billing procedure to ensure that invoices are not issued. The in­ternal audit staff should verify that all customers using evaluated re­ceipts systems are not sent invoices. The simplest approach is to extract from the master customer file all those customer records with an acti­vated evaluated receipts flag and compare this list to the sales journal to see if invoices were printed.
• Review customer complaints for issues related to evaluated receipts. The management team should regularly review the customer com­plaints log to see if there are any issues with evaluated receipts tags not being in the proper format or invoices incorrectly being sent to cus­tomers who do not want them.

Evaluated receipts is an advanced payables concept that is not likely to be adopted by the majority of businesses, so the controls noted here are likely to impact only a small proportion of all orders passing through the order entry, credit, and shipment processes. Nonetheless, ensuring that they function properly can have a significant impact on a company’s ability to be paid in a timely manner by customers who use this system.

[tags]evaluated receipt customers, shipment to evaluated[/tags]

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