Part B
Thabo Ndlovu,the internal audit manager and Amani Naidoo, the internal auditor, were responsible for completing and finalising the audit of the distributions department of Sunlook Ltd
The purpose of the audit was to audit the adequacy and effectiveness of the internal controls over the distribution process.
On March a sample of orders was selected and reviewed by Amani. The sample was randomly selected from a total of orders for the period January to April
Orders selected were reviewed to establish:
Whether orders were paid in full before the sunglasses were dispatched to the customer.
Ensure that all orders were dispatched within the hour turnaround time.
The following was noted on the working paper SGL:
tableOrders paid in full,Orders dispatched within hoursSample of orders, orders were not paid in full, orders were not dispatched in time
Thabo Ndlovu reviewed the working paper on June Upon further investigation the following became clear:
It was noted that some orders were dispatched before it was paid in full. According to company policy all orders should be paid in full before sunglasses can be dispatched to the customer.
The clerk in the distribution department can override the system and authorise the sunglasses to be delivered without the full amount being settled.
Due to the orders not settled in full the bad debts increased by for the period ending April
REQUIRED
Marks
Compile a working paper that contains all the relevant information that should be included in a working paper. In your design and compilation of the working paper, ensure that it includes all the elements of a working paper.
List and describe the three requirements that every sample selected must comply with.
Based on the information provided regarding the orders not paid in full, formulate a complete audit finding. The finding should be structured using the five elements of an audit finding as headings.
