Financial Transactions and Control Environment at CapeTown Essentials $($Pty$)$ Ltd

After years of using a manual system, CapeTown Essentials embraced modernization by transitioning to a new

comprehensive financial software system. This system promised to seamlessly manage everything from sales and

inventory to procurement and payroll. The transition was driven by the company's desire to streamline operations and

improve efficiency.

In the initial months, the staff at CapeTown Essentials noticed a series of unexpected events. Some inventory records

didn't match the physical stock, and a few employees raised eyebrows when their salary slips showed unexpected

changes. On another occasion, the finance department was taken aback when a shipment of goods arrived, a result of an

order that no one in senior management recalled approving.

Customers, who were once very appreciative of the company's billing accuracy, started calling in with concerns about

their invoices. The finance team, already swamped, found it challenging to address these concerns promptly. They were

also juggling multiple roles, from entering data to approving transactions, all within the same system interface.

The IT team, while ensuring that employees had passwords to access the system, hadn't yet rolled out additional security

measures they had been considering, like multi$-$factor authentication. They were also in the midst of discussions about

setting up alerts for significant system activities and how best to maintain a log of all user activities. Amidst all these

operational challenges, the topic of data backup and disaster recovery was tabled for a future meeting.

The leadership at CapeTown Essentials, while optimistic about the potential of the new system, began to realize that their

heavy reliance on it came with its own set of challenges. They understood that any oversight or glitch could ripple through

their financial and operational reports, potentially affecting the company's reputation and bottom line.QUESTION $3(24$ Marks$)$

Given the financial transactions and control environment described for CapeTown Essentials $($Pty$)$ Ltd:

a$)$ Identify the potential risks associated with the challenges mentioned in the scenario. $(8$ Marks$)$

b$)$ Explain the impact of each risk on the organisation. $(8$ Marks$)$

c$)$ For each identified risk, recommend an appropriate control that the company should implement to

mitigate the risk.

$(8$ Marks$)$