THE EVALUATION OF INTERNAL CONTROL OVER SALES AND COLLECTION CYCLE ( CASE STUDY IN PT.XYZ)

Abstract

This research intends to observe and to examine the internal control over sales and collection cycle in PT.XYZ as well to analyze, to assess and to identify potential weaknesses in the sales and collection cycle and the internal control related to those cycle of the company using COSO’s Internal Control – Integrated Framework. Moreover, it provides specific recommendation based on the framework to overcome the discovered potential weaknesses. The method of analysis used in this research is by assessing the current sales and collection cycle implemented in the company, along with the internal controls applied within the cycles. Subsequently, the potential weaknesess will be identified which then generates the specific recommendations. This research is using interview and observation to the field in collecting the primary data to know the underlying idea and critical condition that occurred in the company’s circumstances towards the implementation of internal control. Secondary data is obtained from literature review and documentation. The current sales and collection cycle of PT.XYZ are still comprised with potential weaknesses such as the maintaining of control over time through proper credit authorization, segregation of duties, supervision and adequate documentation.Hence, as the company business keeps growing. It is important to focus more its sales and collection cycle system as well as the internal control in order to achieve the most effective and efficient methods in operating the business.