Independent Verification
The objective of independent verification is to verify the accuracy and completeness of tasks that other functions in the process perform. To be effective, independent verifications must occur at key points in the process where errors can be detected quickly and corrected. Independent verification controls in the revenue cycle exist at the following points:
1. The shipping function verifies that the goods sent from the warehouse are correct in type and quantity. Before the goods are sent to the customer, the stock release document and the packing slip are reconciled.
2. The billing function reconciles the original sales order with the shipping notice to ensure that customers are billed for only the quantities shipped.
3. Prior to posting to control accounts, the general ledger function reconciles journal vouchers and summary reports prepared independently in different function areas. The billing function summarizes the sales journal, inventory control summarizes changes in the inventory subsidiary ledger, the cash receipts function summarizes the cash receipts journal, and accounts receivable summarizes the AR subsidiary ledger.
Discrepancies between the numbers supplied by these various sources will signal errors that need to be resolved before posting to the general ledger can take place. For example, the general ledger function would detect a sales transaction that had been entered in the sales journal