AUE2602 Assignment 4A (COMPLETE ANSWERS) Semester 1 2024 - DUE 9 May 2024 ;100% TRUSTED workings, explanations and soluti ons
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Module
Corporate Governance in Accountancy
Institution
University Of South Africa
Book
Auditing Notes for South African Students
AUE2602 Assignment 4A (COMPLETE ANSWERS) Semester 1 2024 - DUE 9 May 2024 ;100% TRUSTED workings, explanations and soluti ons. .... 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 tas...
AUE2602 Assignment 4A
(COMPLETE ANSWERS)
Semester 1 2024 - DUE 9
May 2024 ;100%
TRUSTED workings,
explanations and soluti
ons.
ADMIN
[COMPANY NAME]
, 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. 2. The warehouse has four entry points, therefore entering
and exiting the warehouse are quick processes. 3. Staff responsible for filling
orders can manage their task quickly by entering through sliding doors and
selecting the boxes that they need from the shelves. 4. These staff members
then manually write down which stock they have taken from the selves on a
list kept in the warehouse. 5. This list is then totaled at the end of the week
and the Thyme-Accounting system is updated accordingly. 6. The Thyme-
Accounting system is not updated in real timebecause staff has not been
trained to use the system, and prefer not to engage with the system unless it
is absolutely necessary.
Based on the information provided, there are several internal control
weaknesses and potential risks in ShoeCraft's inventory management
process:
1. Dependency on Mrs. Nike: Mrs. Nike seems to have significant control
over the receiving process. While it's positive that there is a designated
individual responsible for this task, relying solely on one person increases the
risk of errors or fraud. There's a lack of segregation of duties, as Mrs. Nike
both receives goods and updates inventory records in Thyme-Accounting.
This creates an opportunity for potential manipulation of records.
2. Multiple Entry Points in the Warehouse: Having four entry points to the
warehouse might facilitate efficiency in terms of movement, but it also
increases the risk of unauthorized access and potential theft. Without proper
monitoring and controls in place, it's easier for individuals to enter and exit
the warehouse unnoticed, compromising inventory security.
3. Manual Recording of Stock Withdrawals: Staff manually writing down
the stock they take from the shelves introduces a significant risk of errors,
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