Daily Maid Limited is a company that offers deep cleaning and regular household cleaning services to customers. With the advent of the Covid-19 pandemic, the company has changed their policy in respect of collection from customers.

Currently when the service of the company is required, an email is sent to the company and the appropriate staff despatched to conduct the service. Once the job is completed, a self-addressed envelope is left in the customers mail box.

This has resulted in Daily Maid Ltd. having a large receivable balance and the customers are allowed to pay through either cheque or cash, which is received in the stamped addressed envelopes in the post.

The following procedures are applied to the cash received cycle:

1. Once the envelope is received in the Accounts Department, a junior clerk opens the post and if

any cheques or cash has been received, same is logged and the valuables are then placed in a

cash pan.

2. The lodgement is done by any member of the accounts team, that is available after it has been

counted.

3. The details of the cash received are entered into the cash receipts day book by the cashier who

also updates the sales ledger.

4. The bank reconciliation is done a monthly basis and same is done by the cashier. If any errors

are identified, they are not corrected until the following month.

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Required:

For the cash cycle of Daily Maid Ltd.:

(a) Analyse the existing system at Daily Maid Ltd. and explain THREE (3) deciencies in the

system;

(b) For the deficiencies that have been identified in (a), suggest controls to address each of these

deciencies.

(c) Internal Auditors main objective is to test controls that management implement.

Identify tests of controls the auditor of Daily Maid Ltd. would perform, to assess if the

controls are operating effectively.

(d) Briefly explain sources that can be are used by the auditor, to gather information for

assessment of fraud risks.