1. FINANCIAL MANAGEMENT SYSTEM Balance sheet Profit and loss Sales Claims/Warranty Stock Payroll Purchases Assets Cash Taxation Borrowings Risk DisclosuresManagement decisions and policy choices

2. Sales Controls over – Orders in: separated from stores staff and debt collection staff or else documented in a log, sequence checks, agreed to stock movement records and debtor info ) – Sales prices: quoted from authorised list, any variance in accordance with authorised limits, weighted average price reviewed at regular intervals – Delivery: sequential delivery notes raised with receiving signatures required and agreed to stock movement records – Invoicing: sequence checks, restricted use of Cash Sales accounts, raised promptly from delivery notes, un-invoiced delivery notes reviewed – Credit notes: within authorisation limits, only raised in relation to specific invoice number – Debtors ledger: segregated from sales staff, no general journals to control account, reconciled to GL – Credit control: authorised credit limits, regular review of balances to ensure within limits – Debt collection: regular reporting of age of balances, prompt follow up

3. Stock Controls over – Perpetual stock ledger : on-going reconciliation of balance on hand, movements matched to purchases and sales – Standard costing: updated costing to ensure value of stock, and therefore cost of goods sold, correct, variances reviewed regularly – Pick lists: record of what is to be dispatched, when and to whom, created from order logs – Goods Received Notes: record of purchases in to be matched to supplier invoices, un-matched notes investigated – Stock levels: authorised levels of stock to be held and to prompt re-ordering – Stock counts: regular counts to confirm amounts held and value which will affect profit – Stock variances: need explanation and analysis – Stock obsolescence: must be identified to recognise true cost of sales

4. Purchases Controls over – Purchase orders: only raised by authorised staff, sequence checks, matched to supplier invoices – Pricing: invoices checked and approved for contract rates, significant variances investigated – Classification: classified as stock, consumables by knowledgeable staff – Creditor ledger: : segregated from purchasing staff, no general journals to control account, reconciled to GL – Reconciliations: creditor balances to monthly statements

5. Cash Controls over – Cash flow: develop projections as a control to match actual to expected and to prepare for any tightening – No. of accounts: minimise to reduce volume over which controls required – Signatories: multiple signatories to reduce risk of fraud – Authorisation process: all payment requisitions supported by invoices or suitable documentation – Cancellation of documents: documents initialled once payment authorised to ensure not paid twice – Opening of mail: segregated from staff responsible for bank, debtor and creditor reconciliation – Receipt allocation: at time of banking unless unidentifiable – Banking: segregated from staff responsible for bank, debtor and creditor reconciliation – Reconciliation process: segregated from staff opening mail and banking, or detail reviewed and approved

6. Assets: Property, Plant & Equipment Controls over – Asset register: lists all assets for control, security and insurance – Purchase authorisation: authorised limits – Asset identification: for control and security – Depreciation: consider residual value and period of useful life to correctly estimate annual cost – Impairment: review assets annually for changes to depreciation assumptions as this will affect P&L – Insurance: ensure assets insured to minimise risk of loss – Security: review security of assets to minimise risk of loss

7. Payroll Controls over – Hiring : by authorised staff only and after clear due diligence process – Employee files: include all records for compliance with employment legislation – Timesheets: authorised to ensure payment for work performed – Pay rates: authorised and reviewed regularly – Deduction authorities: authorised and retained to minimise risk of disputes – Salary/wage payments: segregated from staff preparing pay – Payroll authorisation: evidence of review for reasonableness, segregated from staff preparing pay – Payroll reconciliations: control over expense, payments and other payroll obligations – Superannuation: reconciled and controlled to reduce risk of non-compliance – Workcover: reconciled and controlled to reduce risk of non-compliance – Leave records: reconciled to ensure correct record of entitlement and reduce risk of dispute

8. Taxation Controls over – Goods and Services Tax: accounts correctly set up to account for GST, BAS reconciled to GST accounts – Fringe Benefit Tax: ensure adequate information collected to allow compliance – Payroll Tax: payments reconciled to payroll monthly, expense reconciled to payments – Income Tax: : ensure adequate information collected to allow compliance, reconcile amount owing to GL

9. Borrowings Controls over – Applications: retain for control over maturity dates and costs charged – Borrowing covenants: measure limits against actual results regularly – Interest cost: measure accurately to control and review cost of funding – Repayment schedules: calculate to ensure correct liability reflected in balance sheet – Security: document security given to ensure no legal issues from future sale of assets etc – Guarantees: document to ensure acknowledged