Baggins Co is an electrical equipment company. It has factories all around the country, and its customers include both stores and individuals who purchase directly from the company's website. The company's fiscal year ends on September 30th, 20X5. You are an audit supervisor of Saidina & Co and are currently reviewing documentation of Baggins Co's internal control in preparation for the interim audit. Baggins Co's website allows individuals to order goods directly, and full payment is required beforehand. The website is currently not linked to the inventory system, therefore inventory levels are not verified when orders are submitted. The lower of cost and net realisable value is used to value inventory. Goods are despatched via local couriers; however, they do not always record customer signatures as proof that the customer has received the goods. Over the past 12 months there have been customer complaints about the delay between sales orders and receipt of goods. Baggins Co has investigated these and found that, in each case, the sales order had been entered into the sales system correctly but was not forwarded to the despatch department for fulfilling. Retail customers of Baggins Co. are subjected to credit checks before being accepted, and sales ledger clerks set credit limits accordingly. These customers place their orders through one of the sales team, who decides on sales discount levels. The raw materials used in the production process are purchased from a wide range of suppliers. As a result of staff changes in the purchase ledger department, supplier statement reconciliations are no longer performed. Additionally, changes to supplier details in the purchase ledger master file can be undertaken by purchase ledger clerks as well as supervisors. In the past six months, Baggins Co has changed part of its manufacturing process and as a result, some new equipment has been purchased, however, there are considerable levels of plant and equipment which are now surplus to requirement. Purchase requisitions for all new equipment have been authorised by production supervisors and little has been done to reduce the surplus of old equipment. Required: a. In respect of the internal control of Baggins Co: i. Identify and explain SIX (6) deficiencies; ii. Recommend a control to address each of these deficiencies; and iii. Describe a test of control Saidina & Co would perform to assess whether each of these controls, if implemented, is operating effectively. Note: Prepare your answer using three columns headed Control deficiency, Control recommendations and Test of control respectively. The total marks will be split equally between each part. (18 marks) b. Describe substantive procedures the auditor should perform at the year-end to confirm plant and equipment additions. (2 marks)