Goal A: Reduced Inequalities & Sustainable cities and communities Taxi aims to address the commercial problems that perpetuate inequality in the taxi industry affecting taxi drivers, taxi owners and taxi users. The inequalities affecting taxi drivers include the following: Taxi drivers rarely own the taxis they drive. Taxi drivers do not earn enough to live sustainably and pay an exorbitant rental cost for using the owners taxi, and that does not allow the driver to earn a minimum wage. In addressing these inequalities, Taxi believes in paying above minimum wage and paying taxi drivers commission of 50% of each trip undertaken (i.e. 50% of Taxi revenue). The company therefore has to keep its operating costs low, in order for the payment of the commission to drivers to be sustainable. Taxi drivers are called associates. Taxi has 27 000 associate contracts, and the contract terms include paying the associates an amount above the minimum wage as a monthly fixed payment (of R6 000) and commission. Although associates are still not owners of the taxis they drive, they earn over minimum wage and some eventually buy their own taxis. Taxis efforts act as a wealth creation vehicle for the associates. The CEO of Taxi is quoted as saying We have a mantra we try to apply in all aspects of our company: its all about the people, technology and achieving sustainable development goals.

Based on the results of the audit planning and tests of controls, the audit partner decided that substantive testing in the form of analytical procedures is appropriate for Associate Expenses. You are creating an expectation of Associate expenses for the year, and later you will compare this expectation to the actual amount, to conclude on the accuracy of Associates expenses. Below is an extract of the Associate Expenses workpaper you are preparing: Overview of results of tests of controls, and its effect on substantive testing: Test of controls were conducted on all key controls in the operating expenses business process and these were found to be operating effectively for the financial year Objective: The objective of this workpaper is to perform substantive analytical procedures to test the accuracy of associate expenses. Procedures performed: An expectation of the total associate expense amount is calculated below: Number of associates Fixedrate amount Commission rate Total trip value Total R Rmillion Rmillion Associate expenses Fixed rate 27 000 6 000 R 162* Associate expenses Commission 50% 730 R 365^ Expected associate expenses R 527 The expected total associate expense for the year is R527 million. *This result is the total of number of associate drivers multiplied by the fixed rate amount. ^This result is the total of the annual trip value (revenue) multiplied by the commission rate of 50%.

REQUIRED MARKS 1. With reference to the background information and Goal A: Formulate the audit procedures that you would perform to ensure that the data used in the Associate expenses analytical procedure calculation is relevant and reliable as audit evidence. Note: To guide you in understanding the data used in the analytical procedure, think of all the inputs required to calculate the associate expenses. (9