Case-Based MCQs – Revenue, Payroll & Procurement Cycles

  

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.