KINGDEE K/3

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KINGDEE K/3S INTERNAL CONTROL FUNCTIONS IN
ACCORDANCE WITHSARBANES-OXLEY SECTION 404
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CONTENTS
WORKFLOW CONTROLS
FOLLOW-UP ON EVENTS
LIMITATION OF ACCESS TO INFORMATION
PRENUMBERED DOCUMENTS
RECONCILIATION CYCLE COUNTING
INPUT CONTROLS
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WORKFLOW CONTROLS
INTERNAL CONTROL RULES
RISKS TO BE ADDRESSED
Credit Memos/customer refunds are reviewed and
approved by sales management.
Fictitious or duplicate returns/credit
memos/refunds may go undetected.
Management reviews and approves prices at least
annually and approves any additions or changes to
the system price tables.
Customers may be charged inappropriate prices for
items purchased and gross revenues are not
accurately stated.
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K/3S SOLUTIONS
SEGREGATION OF DUTIES
APPROVAL REQUIRED
MULTI-LEVEL APPROVAL
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WORKFLOW CONTROLS
INTERNAL CONTROL RULES
RISKS TO BE ADDRESSED
Credit memos for returned goods are issued before
returned material is received.
Returned goods are isolated and timely inspected
before credit is granted. Can set in the system
that credit memo can only be generated from goods
return receipt slip.
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K/3S SOLUTION
Red ink invoice corresponds to credit memo
REQUIRED SEQUENCE OF EVENTS
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FOLLOW-UP ON EVENTS
RISKS TO BE ADDRESSED
INTERNAL CONTROL RULES
Increase in bad debt risk associated with
potential customer cash flow problems.
Customers with past due account balances are
notified timely.
Un-invoiced receipts may not be resolved in a
timely manner, leading to failure to pay
invoices/freight bills in accordance with payment
terms.
Received Not Billed financial ledger account
reconciliations are prepared and reviewed
according to company policy
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K/3S SOLUTIONS
PREWARNING FOR OVERDUE A/R
EXECUTION REPORT ON ORDERS
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LIMITATION OF ACCESS TO INFORMATION
INTERNAL CONTROL RULES
RISKS TO BE ADDRESSED
Only authorized users have access to maintain
material specific or customer specific prices and
the list of users with access is periodically
reviewed for accuracy.
Employees may perpetuate and conceal errors or
irregularities while performing their duties if
their roles involve conflicting interests or when
there is a high dependence on one individual.
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K/3S SOLUTIONS
AUTHORITY CONTROL ON FUNCTOINS
AUTHORITY CONTROL ON FIELDS
AUTHORITY CONTROL ON DATA
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PRENUMBERED DOCUMENTS
INTERNAL CONTROL RULES
RISKS TO BE ADDRESSED
Customer orders are consecutively numbered,
logged into the system, utilize valid order types
and periodically monitored for accuracy and
completeness (e.g. price, quantity, delivery
date)
Orders may be incomplete, lost, or delayed,
resulting in lost sales and/or excessive returns.
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K/3S SOLUTIONS
CUSTOMIZABLE CODING
CONSECUTIVE DOC NUMBERS
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RECONCILIATION CYCLE COUNTING
INTERNAL CONTROL RULES
RISKES TO BE ADDRESSED
Fixed Asset detail records recorded in the
sub-ledger are agreed to the General Ledger when
initially entered into the detail system.
Asset sub-ledger does not agree with the Asset
general ledger control account on a total or by
category basis.
All balance sheets accounts are reconciled in
accordance with the Corporate Account
Reconciliation Policy.
Materials transactions are not recorded in the
material ledger or general ledger.
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K/3S SOLUTIONS
DATA TRANSMISSION BETWEEN MODULES
RECONCILIATION BETWEEN SUBSYSTEMS
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RECONCILIATION CYCLE COUNTING
RISKES TO BE ADDRESSED
INTERNAL CONTROL RULES
When cycle counting is used, inventory
adjustments are recorded within one day after
completion of root cause analysis. Financial
records are adjusted in the current month or no
later than the second month.
Incomplete inventory postings may impact
financial reports
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K/3S SOLUTIONS
REMIND OF PHYSICAL CYCLE COUNTING
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INPUT CONTROLS
INTERNAL CONTROL RULES
RISKES TO BE ADDRESSED
System edit checks prevent records from being
entered without all required fields being
completed.
Additions or changes in personnel data may not be
recorded completely, accurately or timely.
System edit checks perform relational validations
(search on employee number, position number, name
and address, etc.) to prevent duplicate entries.
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K/3S SOLUTIONS
AUTO CHECK FOR INCOMPLETE FIELDS
AUTO CHECK FOR DUPLICATE RECORDS
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INPUT CONTROLS
RISKES TO BE ADDRESSED
INTERNAL CONTROL RULES
System does not permit posting of an unbalanced
journal entry.
Duplicate, unauthorized, or incorrect journal
entries are posted.
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K/3S SOLUTIONS
AUTO CHECK FOR UNBALANCED JOURNAL ENTRIES