Cloudera Co assembles mobile telephones in a large factory. Each telephone contains up to 100 different parts, with each part being obtained from one of 50 authorised suppliers. Mobile telephones are assembled in batches of 10,000 to 50,000 telephones. When a batch is scheduled for production, a list of parts is produced by the design software and sent, electronically, to the ordering department. Staff in the ordering department use this list to place orders with authorised suppliers. Orders can only be sent to suppliers on the suppliers database. Orders are sent using electronic data interchange (EDI) and confirmed by each supplier using the same system. The list of parts and orders are retained on the computer in an orders placed file, which is kept in date sequence. Parts are delivered to the goods inwards department at Cloudera. All deliveries are checked against the orders placed file before being accepted. Paper invoices are sent by all suppliers following dispatch of goods. Invoices are sent to the accounts department, where they are stamped with a unique ascending number. Invoice details are then entered into the computerised payables ledger. The invoice is signed by the accounts clerk to confirm entry into the payables ledger. Invoices are then retained in a temporary file in number order while awaiting payment. After 30 days, the payables ledger automatically generates a computerised list of payments to be made, which is sent electronically to the chief accountant. The chief accountant compares this list to the invoices, signs each invoice to indicate approval for payment, and then forwards the electronic payments list to the accounts assistant. The assistant uses online banking to pay the suppliers. The electronic payments list is filed in month order on the computer.

Required: a) Being the audit supervisor, you are required to perform tests of details on the purchases system. In your answer you are required to list the relevant audit procedures you should perform to confirm the assertions for purchases in the financial statements of Cloudera Co. For each procedure, explain the purpose of that procedure.

b) Being the audit supervisor, you are required to perform tests of details on the trade payables balance in Cloudera Cos financial statements. In your answer you are required to list the relevant audit procedures you should perform to confirm the assertions for purchases in the financial statements of Cloudera Co. For each procedure, explain the purpose of that procedure.