HCGA232-1 (Corporate Governance in Accountancy)

QUESTION 2 (40 MARKS) You are employed at an audit firm called ABC Auditors and are an Auditor Senior. After completing obtaining your CA (SA) qualification, you completed a course in computer studies.

You were assigned to the Compute (Pty) Ltd (Compute), 2023 financial year audit, and are required to assist specifically with all IT-related matters. Compute is a bus operating company. The entity hires its buses to schools, churches, and companies that require transporting people from point A to point B. Compute operates from 4 warehouses/depots in South Africa. They have standard monthly contracts with schools and receive daily bookings each month.

Online Sales All bus reservations by customers must be performed online. Compute does not accept walk-ins or reservations via phone calls and emails. Potential customers are expected to browse the web page, which allows them to search the availability and costs of the buses of their choice.

A customer who identifies an available bus can book the bus by providing the individual/companys name, surname, ID or company registration number, contact number, e-mail address, and method of payment. Once a customer confirms a booking on the website, they have 48 hours to pay for the booking. Payment may be made either online by way of a credit card transaction (via a secure connection) or by an electronic funds transfer (EFT) when making the booking. Proof of payment must be faxed or emailed to Computes offices.

The bus fee is immediately recognised as revenue at the time when payment is made by a customer. The database is immediately updated and the bus is reserved. A booking confirmation is issued electronically (via e-mail) to the customer shortly after payment has been made. At the end of each day, the customer file (PTF) is updated to the general ledger.

Accounts Receivable Most of Computes sales are on credit and the credit terms granted are 30 days. The sales and debtors cycle has been computerised with purchased software packages.

The accounting records are maintained on the mainframe computer. The debtors application software was installed and implemented six months ago and each of Computes 4 depots has online terminals that are connected to the mainframe computer. Online input is used, and batch processing takes place at the head office at the end of each working day by the Accountants.

The outlay of the fields in the debtors master file is as follows:

1. Account number
2. Name of the debtor
3. Category code
4. Address of the debtor
5. Date (of transaction)
6. Description (of the transaction)
7. Amount due
8. Current
9. 30 days
10. 60 days
11. 90 days and more
12. Credit limit

REQUIRED:

2.1 Refer to the information provided under the heading: Online Sales. Discuss the specific application controls(IT-related controls) that should be in place to ensure that the internet reservation of buses is accurate and complete. (15 marks) 2.2 Refer to the information provided under the heading: Accounts Receivable. Describe the application controls (IT-related controls) that should be present to ensure all master file amendments to the debtors master file are complete, accurate, and valid.

Please structure your answer by using completeness, accuracy, and validity as headings.

(25 marks)