Read this post and article: The importance of internal control in revenue recognition cycles cannot be overstated. The revenue cycle consists of the business activities and the information processing systems that are related to the goods and services that are provided to customers, and the process of collecting the payments for those goods and services. This information is then used in other accounting cycles to determine how much inventory is needed to meet product demands (Steinbart, 2018).

Revenue recognition standards as set up by IFRS 15 and ASC 606 assert that revenue recognition shows the transfer of goods and services that are promised to customers in an amount that accurately shows the consideration to which the entity is entitled in exchange for the goods or services (Almohashi, 2021).

It is important to understand what can happen when fraud is used to manipulate revenue. Without proper controls, revenue can be overstated. According to the Committee of Sponsoring Organization (COSO), over 60% of revenue recognition in cases of fraud is related to revenue recognition (Almohashi, 2021).

COSO developed internal controls in its 2013 internal controls in their integrated framework. Some of the important measurements that came from these standards were assuring that internal controls assured accurate timing of revenue recognition and determining that the transaction actually occurred.For this reason, it is important that these four qualitative objectives are recognized and understood. They are understandability, relevance, reliability, and comparability (Almohashi, 2021).

It is imperative that there are procedures to assure that there are authorization rules in place, that there is ongoing verification delivery, invoicing, and inventory records. There should be ongoing monitoring, as well as internal and external auditing and monitoring, looking for any entries that appear unusual (Almohashi, 2021).

article - https://revenuerecognition.com/internal-controls-with-the-new-revenue-recognition-standard/

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