QUESTION 1 21 marks Justine Mashabane has a masters degree in internal auditing and is a certified internal auditor (CIA). Justine worked in the internal auditing department of a South African listed company for almost 15 years and held the position of deputy to the chief audit executive (CAE) when he decided to resign from the company to set up his own internal audit consulting practice. During the years that he worked at the company, Justine was exposed to a wide variety of assurance and consulting internal audit engagements. He advised senior management and the board of directors on various financial, operational, information technology-related and fraud risk issues. Adventure Travels, a private company in the travel industry, intends buying the majority shares in Casino (Pty) Limited, a company that owns several casinos and hotels throughout South Africa. Adventure Travels does not have suitable knowledge of the hotel industry to be able to take over the management of Casino and will therefore have to rely on Casinos current systems, management and workforce to continue operating as usual. Realising that they will have to rely heavily on Casinos staff, and with the consent of Casino, Adventure Travels board of directors approached Justine to lead an audit of the human resources processes at Casino. Justine has assigned two of his temporary staff members to assist him with this engagement and instructed them to scrutinise all the board meeting minutes as well as all the internal audit reports and external audit management reports issued to Casinos board of directors since January 2018 for findings that may indicate risks pertaining to human resources processes. They presented Justine with the following list of comments and findings extracted from the minutes and reports: 1. Formal job descriptions do not exist for most of the positions in the organisation. 2. Authority and responsibilities assigned to a key staff member in the administration office at one of the hotels contravened basic principles of maintaining effective segregation of duties. 3. Newly appointed employees do not receive a copy of HR policies and procedures or the Code of Conduct upon employment and employees do not all receive regular updates on the HR policies. 4. Due to a scarcity of qualified hotel management staff, Casino has engaged into an arrangement with an elite hotel school to annually employ a number of their qualifying students on a contract basis for a maximum of 2 years. 5. The average working experience of permanent staff at Casino is 3 years. 6. An article appeared in a prominent newspaper where Casino employed the best qualifying chef for 2018 from the hotel school as the main chef at one of its new hotels.

REQUIRED

1.1 Study the above scenario and develop a risk and control matrix of the human resources processes of Casino (Pty) Limited. Structure your response as follows: (15) Risks Controls

1.2 Formulate audit procedures that the internal auditor would perform to establish whether the controls over staff recruitment are adequate and in accordance with the policies. (6)