Direct controls and tests of controls [26 marks} ‘You are the auaitor of Plumb Supplés (Py) Ltd a company that manufactures a wide range of ph supplies for household and commercial purposes. The manufacturing plant is located in Epping and hata’ December year-end. ‘The following extract from the purchases and payments cycle was obtained through discussions held wit the inventory controler, chief buyer and chief financial officer: Tixtract Ordering of goods When an employee identifies that the inventory used by his/her team is running low, he/she ‘completes a requisition on the company's intranet from the computer located in the breakroom. ‘The requisition is stored on a requisition pending file, An email notification of the reguisition is sent to the employee's manager. The manager logs onto the Inventory system by using his ‘unique user ID and password and Identifies whether or not the inventory levels are low. He has read-only access to the inventory file, He inspects the existing process costing schedules to Identity if the company requires the item of inventdry being requisitioned in order to fulfil orders for the next three months. If he Identifies that a need does exist, he digitally authorises the requisition and itis moved to an approved requisition file. ‘Anotication of the approved requisition is sent to a buyer Inthe buying department who logs onto the system and inspects the approved requisition, The buyer contacts three suppliers on the approved supplir list for uotes and requests them to email the quotes to [email protected], Once the three quotes are emalled to the buyer, he scans them and toads them onto the buyers system. He inspects the quotes and determines the one which best meets the company’s need. He completes an electronic purchase order on the buying system which is sent to the chief buyer for approval. The chief buyer logs onto the system and inspects the purchase order. He compares it with the three scanned quotes and approved electron requisition, and once he is satisfied, he digitally authorises the purchase. The buyer receives an email Powered by CamScanner‘OUPIERT PURCHASES ANOMMENTS CYCLE 124 1 ipotification that the chief buyer has approved the purchase order and that the order can be {] cpleced by the buyer withthe supplier va email Recolving of goods ‘The foods are delivered to the goods receiving area of the warehouse. On atival ofthe goods at “the warchouse, the goods recelving clork asks the driver for the company name’ and purchase ‘order number, He logs onto th system with his mobile tablet computer by using his unique user [210 and password. He has readonly access to the purchase order. Ho pulls the purchase order up Fon the mobile tablet computer and proceeds to receive the goods being delivered, Once the goods are offload, the goods receiving clerk counts the goods and Inspects them to see they are damaged and if they agree with the purchase order. The goods recelving clerk prepares a goods recelved note (GRN) on his mobil tablet computer ‘and both he and the driver sign it. Once the GRH Is signed, a notifeation is sont tothe creditors ‘lerk stating that the goods have been delivered. The emall address to which the buyer sent the [f purchase order is immediatoty emailed with a copy of the GRN. = The goods are moved from the recelving area to the storage section ofthe warehouse. A transfer + request Is signed by the goods receiving clerk and the warehouse clerk on the goods recelving ' ')” clerk's tabet aftr they have both counted the tems being transfered. ;| Q |]: Once the goods are stored in the warehouse, the manager who requested the Inventory Is informed by the warehouse clerk that the inventory is available and can be collected. The goods ‘are transferred to production after the manager fequesting the goods and the warehouse clerk ‘count the goods and sign the transfer request on the warehouse clerk's mobile tablet device, | || Once the creditors clerk receives an email notication that the goods have been received, he/ |] she logs onto the system to view the goods received note. He/she has readonly access to the inventory system. Recording of creditors ! | He/she compares the goods received note, the approved purchase order, the approved ‘requisition and the invoice for any inconsistencies and signs the invoice as proof that he/she thas compared the documents. The creditors clerk re-performs the calculation on the invoice and initials the invoice prior to recording the purchase on the system. ‘Where the detail on the invoice is diferent to the detail recorded on the goods received note, the cent is contacted via email to find out wty the difference arose. Ifthe client s adamant that the imoice is comect, the difference is placed on the creditor reconciliation as a reconciling difference. The purchase Is recorded on the system by the crecitos cletk and reviewed by the nancial accountant, who ditally authorises the process. Payment of creditors ‘The creditors clerk performs a monthly creditors reconciliation. The creditors reconcaon andthe Invoices tobe pld are handed tothe ascountant fr review. ‘The accountant inspects the Invoices and re-performs the logic of the reconciliation and signs the reconciliation as proof of the checks that he performed. Powered by CamScanner‘422. PART. THEAUDITES RESPONSIBNITY FOR FINANCIAL INFORMATION : The company has a policy of only making payments to suppliers va electronic funds transfer | (ern. ‘The financial accountant loads all suppliers that the company has had dealings with for more than three months as appioved beneficiarles on the company’s bank account. The chief financial officer reviews the bank details of all beneficiaries that the financial accountant has loaded ‘nto the company’s EFT account by inspecting the documentation (e.g. original bank letter) used by the financial accountant. \ ‘Once she approves of the details, they are stored on the company’s EFT account. She fles a report on a weekly basis, which she signs, indicating all new beneficiaries. ‘The financial accountant loads all of the payments on the compary’s bank account. The chief financial officer reviews and approves the payment after she checks a sample of the documentation (e.¢. creditors reconciliation and invoices). Sho signs off the documentation she has reviewed. ‘She hands all of the supporting documents back to the creditors clerk for fllng purposes. REQUIRED . [dentfy the key internal controls for the purchases and payments cycle included in the above syste description and design the appropriate audittests to determine whether or iotthe control s functioning Indicated by management. | For each test of control, also fe the asertion addr ll nt line it i) Faas eta ao pode he sein addessodasweste at iota Powered by CamScanner