ERP Compliance Audit - RFM
Financial Module
The financial module is the core of the ERP software systems. It gathers financial data from
various functional departments, and generates valuable financial reports such as general ledger,
trial balance, balance sheet and quarterly financial statements.
Due to access limitations the three main areas of focus are:
1. Journal Vouchers
2. Bank Reconciliations
3. Claims
Journal Vouchers
Purpose: A written authorization prepared for every financial transaction, or for every
transaction, that meets defined requirements.
A journal voucher is an integral part of the audit trail, and carries (1) a serial number, (2)
transaction date, (3) transaction amount, (4) ledger account(s) affected, (5) reference(s) to
documentary evidence (such as invoices or receipts) supporting the entry, (6) brief description of
the transaction, and the (7) signature(s) or initials of one or more authorized signatories.
Personnel involved in the process:
1. Posting of JV – Mr. Sabir Amin
2. Approval of JV – Mr. Umair
3. Adjustments of JV – Mr. Ashar Ali & Mr. Zulqarnain
4. Uploading of Supporting Documnts – DMS
5. Posting of RV and PV – Mr. Imran Waheed
6. Reviewing RV and PV – Mr. Kashif
Standard Procedure:
Activity
Prepare journal entry
template &
supporting
documentation
Save supporting
documentation in
assigned location
Submit journal entry
for approval
Review journal entry
template and
supporting
documentation
Approve/Confirm
journal entry
Posting of
adjustment entries.
Review and Confirm
Adjustment entries
Posting of PVs and
RVs
Preparer
(Sabir)
Approver
(Umair)
Adjustment entries
(Ashar/Zulqarnain)
DMS
Cash
Dept.
✅
✅
✅
✅
✅
✅
✅
✅
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Review and Approve
PVs and RVs
Confirmation of RVs
and PVs
✅
✅
Risk Assessment:
1. Incomplete information: Incorrect or incomplete narrations posted by the preparer
resulting in difficulty tracking the required JV.
2. Lack of timeliness: Time lag due to non-competency of the individual resulting in noncompletion of financial statements in the required period.
3. Errors in posting: Increased errors in posting can cause a delay and hence defer the process
of payments and receivables.
4. Incomplete documentation: Deferred uploading and approval of supporting documents by
DMS can delay the audit trail.
5. Authorization: Lack of timely authorization can result in time lags in the procedure and can
also give discourage the subordinates to co-operate and can also give room to manipulation
of information and data.
Action Plan: Compliance of the aforementioned activities can be checked through the ERP by
ensuring the following:
1. Duties for preparing, approving, and entering journal entries are segregated. Duties
assigned are not overlapping or not carried out by another person.
2. Policies and procedures involving journal entries and other adjustments should be
documented and distributed to personnel involved in initiating entries to the general
ledger, transaction processing systems, or consolidation process
3. Entries are posted with adequate descriptions/narrations.
4. Adjustments are recorded and approved on a timely basis.
5. Number of entries posted by the individual on a monthly basis compared to the percentage
of errors (checked via CMS) to ensure individuals competence and knowledge.
6. Each entry should is signed by the preparer
7. Each entry is confirmed by the senior management on a timely basis.
8. Number of days it takes the cash department to post, review and confirm the PVs and RVs
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Bank Reconciliations
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