AUE2602
Assignment 4A
(COMPLETE
ANSWERS)
Semester 1 2024
- DUE 9 May
2024
CONTACT:
, ShoeCraft (Pty) Ltd is a reputable shoe manufacturing company known for its
high-quality footwear. As an auditor conducting an inventory cycle audit, you
have been tasked with evaluating ShoeCraft's internal controls. During your
review, you note the following: 1. Mrs Nike is responsible for receiving
completed goods at the companys warehouse. She checks the slip received
from the production section, compares it with the number of boxes entering
the warehouse and signs it. She then updates the inventory records on the
company’s accounting system, Thyme-Accounting, by signing in with her
unique password.
It seems like ShoeCraft has a fairly standard process for receiving completed goods into the
warehouse. Mrs. Nike is responsible for this task, and she follows a set procedure:
1. Receipt of Goods: Mrs. Nike receives completed goods at the company's warehouse. She
compares the slip received from the production section with the number of boxes entering
the warehouse. This step ensures that the quantity of goods received matches what was
expected based on production records.
2. Documentation and Verification: After comparing the slip with the actual goods
received, Mrs. Nike signs off on the documentation. This indicates her verification of the
received items and serves as a record of the transaction.
3. Inventory Record Update: Mrs. Nike then updates the inventory records on the
company's accounting system, Thyme-Accounting. To access and make changes to the
inventory records, she signs in with her unique password. This step ensures that inventory
records are accurately maintained in the accounting system.
While this process appears to have some internal controls in place, there are a few points to
consider:
Segregation of Duties: It's important to ensure that one person doesn't have control over
all aspects of a transaction. In this case, Mrs. Nike is responsible for both receiving goods
and updating inventory records. Ideally, there should be segregation of duties to prevent
potential errors or fraud.
Authorization Controls: Access to the accounting system should be restricted to
authorized personnel only. Mrs. Nike's unique password helps in identifying who makes
changes to the inventory records, but there should also be controls in place to monitor and
review her activities within the system.
Reconciliation: Regular reconciliation of physical inventory with the records in Thyme-
Accounting is crucial to identify any discrepancies and ensure the accuracy of inventory
records.
As an auditor, it would be important to assess these controls and potentially recommend
improvements to strengthen internal controls and mitigate risks related to inventory management
and record-keeping.
Assignment 4A
(COMPLETE
ANSWERS)
Semester 1 2024
- DUE 9 May
2024
CONTACT:
, ShoeCraft (Pty) Ltd is a reputable shoe manufacturing company known for its
high-quality footwear. As an auditor conducting an inventory cycle audit, you
have been tasked with evaluating ShoeCraft's internal controls. During your
review, you note the following: 1. Mrs Nike is responsible for receiving
completed goods at the companys warehouse. She checks the slip received
from the production section, compares it with the number of boxes entering
the warehouse and signs it. She then updates the inventory records on the
company’s accounting system, Thyme-Accounting, by signing in with her
unique password.
It seems like ShoeCraft has a fairly standard process for receiving completed goods into the
warehouse. Mrs. Nike is responsible for this task, and she follows a set procedure:
1. Receipt of Goods: Mrs. Nike receives completed goods at the company's warehouse. She
compares the slip received from the production section with the number of boxes entering
the warehouse. This step ensures that the quantity of goods received matches what was
expected based on production records.
2. Documentation and Verification: After comparing the slip with the actual goods
received, Mrs. Nike signs off on the documentation. This indicates her verification of the
received items and serves as a record of the transaction.
3. Inventory Record Update: Mrs. Nike then updates the inventory records on the
company's accounting system, Thyme-Accounting. To access and make changes to the
inventory records, she signs in with her unique password. This step ensures that inventory
records are accurately maintained in the accounting system.
While this process appears to have some internal controls in place, there are a few points to
consider:
Segregation of Duties: It's important to ensure that one person doesn't have control over
all aspects of a transaction. In this case, Mrs. Nike is responsible for both receiving goods
and updating inventory records. Ideally, there should be segregation of duties to prevent
potential errors or fraud.
Authorization Controls: Access to the accounting system should be restricted to
authorized personnel only. Mrs. Nike's unique password helps in identifying who makes
changes to the inventory records, but there should also be controls in place to monitor and
review her activities within the system.
Reconciliation: Regular reconciliation of physical inventory with the records in Thyme-
Accounting is crucial to identify any discrepancies and ensure the accuracy of inventory
records.
As an auditor, it would be important to assess these controls and potentially recommend
improvements to strengthen internal controls and mitigate risks related to inventory management
and record-keeping.
