Case-Based MCQs – Revenue, Payroll & Procurement Cycles
*Exam Style*: CIA Part 1/2, US CMA Part 1, ACCA F8/FIA
*Focus*: Documents, Responsible Person, Risk Owner, Deliverables, Key Controls
*CASE 1: REVENUE CYCLE – “TechSell Ltd”*
*Scenario:*
TechSell Ltd sells software licenses. Process flow:
1. *Sales Rep* prepares Quote → approved by Sales Manager.
2. *Customer Service* creates Sales Order in ERP using approved quote.
3. *Warehouse* ships activation key via email; Delivery Note generated.
4. *Billing Clerk* prepares Invoice from Sales Order + Delivery Note.
5. *AR Clerk* records payment; *Treasury* deposits cash.
6. *Credit Manager* sets credit limits and approves new customers.
*Risk Identified*: Sales orders created without credit approval for new customers. Last month $200k shipped to customer who later defaulted.
*Q1. Which document should be mandatory before creating a Sales Order for a new customer?*
A. Delivery Note
B. Purchase Order from customer
C. Approved Credit Application Form
D. Invoice
*Answer:
*Q2. Who is the PRIMARY risk owner for “revenue loss due to uncollectible sales”?*
A. Sales Rep
B. Billing Clerk
C. Credit Manager
D. CFO
*Answer:.
*Q3. Which deliverable evidences that goods were transferred to customer under ASC 606?*
A. Quote
B. Sales Order
C. Delivery Note/Proof of Delivery
D. Invoice
*Answer:
*Q4. Segregation of Duties violation in TechSell would be:*
A. Sales Rep prepares quote + approves quote
B. Billing Clerk prepares invoice + AR Clerk records payment
C. Credit Manager approves credit + collects cash
D. Warehouse ships + Billing invoices
*Answer:
*CASE 2: PAYROLL CYCLE – “ManuCorp”*
*Scenario:*
ManuCorp has 500 employees. Process:
1. *Supervisors* approve timesheets in system.
2. *HR Manager* adds new hires/terminations and updates salary master file.
3. *Payroll Clerk* processes payroll using approved timesheets + HR master data.
4. *Treasury Manager* releases EFT payments after reviewing payroll register.
5. *HR Manager* also reconciles payroll bank account.
*Risk*: Ghost employee detected last audit – salary paid to terminated employee for 3 months.
*Q5. Which key control failed that allowed payment to terminated employee?*
A. Supervisor approval of timesheets
B. Independent reconciliation of payroll bank account
C. Timely HR update of master file + restricted access
D. Treasury review of payroll register
*Answer:
*Q6. Who should be the risk owner for “unauthorized changes to payroll master file”?*
A. Payroll Clerk
B. HR Manager
C. IT Manager
D. Treasury Manager
*Answer:
*Q7. Key deliverable from payroll processing that Treasury uses to authorize payment:*
A. Timesheets
B. Payroll Register/Report
C. HR Appointment Letter
D. Bank Statement
*Answer:
*Q8. SOD conflict in ManuCorp is:*
A. Supervisor approves timesheet + Payroll Clerk processes
B. HR Manager updates master file + reconciles payroll bank account
C. Treasury releases payment + CFO reviews
D. Payroll Clerk processes + Treasury pays
*Answer
*CASE 3: PROCUREMENT CYCLE – “BuildCo”*
*Scenario:*
BuildCo construction company. Process:
1. *Site Engineer* raises Purchase Requisition when stock low.
2. *Purchase Manager* selects vendor, creates Purchase Order. Approved by *Procurement Head* if >$50k.
3. *Receiving Dept* checks goods vs PO, prepares Goods Received Note.
4. *AP Clerk* 3-way matches: PO + GRN + Invoice, then records payable.
5. *Treasury* makes payment after *Finance Manager* approval.
6. *Vendor Master* maintained by *Purchase Manager*.
*Risk*: Duplicate payments made to vendor due to duplicate invoices. AP Clerk paid same invoice twice.
*Q9. Which document is missing in 3-way match if duplicate payment occurred?*
A. Purchase Order
B. Goods Received Note
C. Vendor Invoice
D. None – all present but control failed
*Answer:
*Q10. Who should be risk owner for “unauthorized changes to Vendor Master File”?*
A. AP Clerk
B. Purchase Manager
C. IT Manager
D. Finance Manager
*Answer:
*Q11. Key preventive control to avoid ordering unneeded goods:*
A. 3-way match
B. Approved Purchase Requisition by Dept Head
C. Invoice approval
D. Bank reconciliation
*Answer:
*Q12. Deliverable evidencing that goods were actually received in good condition:*
A. Purchase Order
B. Purchase Requisition
C. Goods Received Note signed by Receiving Dept
D. Vendor Invoice
*Answer:
SUMMARY TABLE – KEY ROLES BY CYCLE.. Gmsisuccess students, please refer this..
**Cycle** **Key Document** **Responsible Person** **Risk Owner** **Key Deliverable**
**Revenue** Sales Order, Invoice, Delivery Note Sales Rep, Billing Clerk Credit Manager Aged AR Report, Credit Approval
**Payroll** Timesheet, Payroll Register Supervisor, Payroll Clerk HR Manager Payroll Register, Bank Rec
**Procurement** PR, PO, GRN, Invoice Site Engineer, Purchase Mgr Purchase Mgr, Receiving Head 3-way Match Report, PO Register
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*EXAM TIPS – CIA/CMA/ACCA*
1. *Risk Owner* = Manager with authority to manage/mitigate risk, not auditor.
2. *SOD*: Never combine Authorization + Custody + Recording + Reconciliation.
3. *Documents*: PR→PO→GRN→Invoice→Payment. Missing any link = control gap.
4. *Deliverable* = tangible output used for next step: PO, GRN, Payroll Register.
5. *Integration*: IA must understand these cycles to test controls, but never perform them.
