AUI 3702 ASSIGNMENT 2 SEMESTER 1 OF 2022
QUESTION 1
1.1 In concideration of the above mentioned weaknessed noted indicate 10 risks
and the improvements (controls) therefore. Your answer should be structured in the
following table format
Weakness Risk Suggested improvement/Control
The factory manager does Fictitious requisitions due The factory manager must delegate some
authorise all purchase to fraud maybe be made of his responsibilities in order to create more
requisitions before they are resulting in fictitious time for himself of reviewing and approving
sent to the buying division purchases being made. purchase requisitions.
The assistant manager There is no clear isolation There must be one person responsible for
or foremen authorises of responsibility in the sense approving purchase requisitions
these purchases. that if something goes wrong
on purchases, it will be
difficult to tell who must
accountable
The assistant manager There is no clear isolation There must be one person responsible for approving
or foremen authorises of responsibility in the sense that purchase requisitions
these purchases. if something goes wrong on
purchases, it will be difficult to
tell who will be held accountable.
The assistant manager or There is no clear isolation of There must be one person responsible for approving
foremen authorises responsibility in the sense that if purchase requisitions.
purchases something goes wrong on purchases
it will be difficult to tell who must be
held accountable
Sometimes the amounts There is a risk that the entity might Despite the fact that the entity aims to earn trade
requested, according to the place orders above its needs resulting discounts orders must be placed according to organmisational
purchase requisitions are in cashflow problems needs to avoid ordering unnecessary goods.
increased to ensure that the
Woolworks qualifies for the There is a risk that goods might be There must be security controls on receiving of goods such as
trade discount. stolen at the receiving area before security personel to avoid risk of theft.
being moved to the warehouse.
The goods are not inspected There is a risk thatn goods of poor The goods must be inspected for their quality and conditions before
for quality and physical quality and poor conditions maybe the goods received notes are signed to avoid acceptance of poor quality
condition be received and accepted. goods
There is no control over There is a risk that goods received Goods received notes should show the date of receipt, the purchase order
blank GRN books notes maybe raised for goods not number and name of the individual checking in the delivery. Originals should
received resulting in creation of be filed security number order and a copy of the goods received note should
fictitious invoices and recording be forwarded to country company's accounts department and filed security
fictitious purchases. number order awaiting the supplier invoice.
There is no review on There is a risk that errors missed by The creditos manager or supervisor must review the work of the creditos
recording of purchases done the creditors clerk might go undetected clerk before purchases are recorded.
by the creditors clerk resulting in recording of incorrect
purchases.
Question 2
2.1 For the activities (a-e) above, identify the steps within the planning stage which is being perfomed
a. (Step 1) Obtain background information of the audit are (preliminary survey)
b. (Step 2) Identify the engagement objectives to be achieved
c. (Step 5) Compile the engagement/ Audit programme
d. (Step 5) Compile the engagement/Audit programme
e. (Step 4) Determine the allocation of engagement resources
2.2 For the abovementioned activities (1-5), provide the type of tool or technique
you will use for the audit and its purpose for use.
QUESTION 1
1.1 In concideration of the above mentioned weaknessed noted indicate 10 risks
and the improvements (controls) therefore. Your answer should be structured in the
following table format
Weakness Risk Suggested improvement/Control
The factory manager does Fictitious requisitions due The factory manager must delegate some
authorise all purchase to fraud maybe be made of his responsibilities in order to create more
requisitions before they are resulting in fictitious time for himself of reviewing and approving
sent to the buying division purchases being made. purchase requisitions.
The assistant manager There is no clear isolation There must be one person responsible for
or foremen authorises of responsibility in the sense approving purchase requisitions
these purchases. that if something goes wrong
on purchases, it will be
difficult to tell who must
accountable
The assistant manager There is no clear isolation There must be one person responsible for approving
or foremen authorises of responsibility in the sense that purchase requisitions
these purchases. if something goes wrong on
purchases, it will be difficult to
tell who will be held accountable.
The assistant manager or There is no clear isolation of There must be one person responsible for approving
foremen authorises responsibility in the sense that if purchase requisitions.
purchases something goes wrong on purchases
it will be difficult to tell who must be
held accountable
Sometimes the amounts There is a risk that the entity might Despite the fact that the entity aims to earn trade
requested, according to the place orders above its needs resulting discounts orders must be placed according to organmisational
purchase requisitions are in cashflow problems needs to avoid ordering unnecessary goods.
increased to ensure that the
Woolworks qualifies for the There is a risk that goods might be There must be security controls on receiving of goods such as
trade discount. stolen at the receiving area before security personel to avoid risk of theft.
being moved to the warehouse.
The goods are not inspected There is a risk thatn goods of poor The goods must be inspected for their quality and conditions before
for quality and physical quality and poor conditions maybe the goods received notes are signed to avoid acceptance of poor quality
condition be received and accepted. goods
There is no control over There is a risk that goods received Goods received notes should show the date of receipt, the purchase order
blank GRN books notes maybe raised for goods not number and name of the individual checking in the delivery. Originals should
received resulting in creation of be filed security number order and a copy of the goods received note should
fictitious invoices and recording be forwarded to country company's accounts department and filed security
fictitious purchases. number order awaiting the supplier invoice.
There is no review on There is a risk that errors missed by The creditos manager or supervisor must review the work of the creditos
recording of purchases done the creditors clerk might go undetected clerk before purchases are recorded.
by the creditors clerk resulting in recording of incorrect
purchases.
Question 2
2.1 For the activities (a-e) above, identify the steps within the planning stage which is being perfomed
a. (Step 1) Obtain background information of the audit are (preliminary survey)
b. (Step 2) Identify the engagement objectives to be achieved
c. (Step 5) Compile the engagement/ Audit programme
d. (Step 5) Compile the engagement/Audit programme
e. (Step 4) Determine the allocation of engagement resources
2.2 For the abovementioned activities (1-5), provide the type of tool or technique
you will use for the audit and its purpose for use.
