In January 2021, Amber Audit has gained a new client: Apple electronics. You are working on the December 2021 audit engagement and Tom, the audit manager has requested that you work on the audit of the purchase cycle. You start with an assessment of the internal controls to determine the control risk for this section of the audit engagement. Because you are not very experienced, the audit manager has requested that you prepare a short memo to his attention to present your assessment of the internal controls over purchases with details about the strengths and weaknesses of the internal control system in place. In order to show that you understand well the objective of this analysis, you decide to include in your conclusion a well justified indication of the areas where you think more audit effort will be required for substantive testing and to list two specific substantive audit procedures you would recommend for the purchase cycle given your assessment of the internal control system.

Bell electronics manufactures radio equipment. Its manufacturing plant and warehouse are located in the same building. When parts are received at the warehouse, the receiver compares the type of goods and quantity to a copy of the purchase order available online. If the quantity received differs from the quantity on the purchase order, the receiver adjusts the purchase order amount online. When the goods are checked by the receiver, she emails the accounting department, recording the type of goods, quantity, and date received. The accounting department uses the email to create a receivers report, and the purchase order is then printed and filed in the accounting department. This online system allows the company to reduce paper, as the hard copy is not needed until the goods are actually received. The companys tracking system automatically assigns the next number in a series to the purchase order just before printing.

After the receipt of inventory has been recorded, the parts are physically moved to the warehousing area, which is located in a locked-up area of at the end of the plant. There is a stores department in a separate area for supplies, such as gloves, wire, and adhesives, all of which are used in significant quantities on a regular basis. When an assembly line worker requires supplies, the supervisor fills out a serially prenumbered requisition card, signs it, and gives it to the worker, who then takes it to the stores department to obtain the needed items. Each supervisor has a stock of requisition cards. When the supplier's invoice is received by the purchasing department, one of the purchasing department staff emails the accounting department, noting the invoice amount, supplier name, date of shipment, and type of goods. The accounting department then matches these items to the purchase order and receiving report and prepares a cheque for the controller to sign. The controller does not sign the check until she also receives an email from the accounting staff indicating that the purchase order, receiving report, and invoice have been matched.

Question: Apply the MacDonald methodology to this case