QUESTION 1

Tandabantu (Pty) Ltd is a small manufacturing company. The companys accounting functions are carried out by the accounting staff consisting of the accountant, Mary Rooseveld, and two clerical assistants, Stella Stirling and Dean Ramjan. The new owner of the business, Peter, is concerned about a number of processes followed and, not having a business background, has asked you to review and report on certain of these processes. However, his immediate concern is the control over the payment of creditors. To gather first-hand knowledge of how the system currently works, Peter himself compiled an accurate description of the system which he has given to you.

1. When an invoice is received from a supplier, it is promptly entered into the purchase journal by Stella Stirling and filed alphabetically by supplier name. When the suppliers monthly statement arrives, Stella Stirling agrees the invoices received to the statement. She also checks that any payments that were made to the supplier by Tandabantu (Pty) Ltd are reflected on the statement.

2. If an invoice reflected on the statement has not been received, Stella Stirling highlights the invoice(s) and marks itoutstanding on the statement. The full amount reflected on the statement is paid. When the outstanding invoice is received, it is filed with the statement to which it relates and the outstanding mark on the statement is crossed out and dated.

3. Using the statements, Stella Stirling then makes a list of all creditors and the amounts which they are to be paid. The listis passed to Mary Rooseveld, who writes out a cheque for each creditor under R5 000. All cheques are carefully written out and marked not transferable. Mary Rooseveld signs each cheque and returns them with the list to Stella Stirling. Stella Stirling confirms the amounts of each cheque and that there is a cheque for each creditor on the list under R5 000. Stella Stirling writes the cheque number next to each payment on the list and then mails the cheques to the creditors attached to a Tandabantu (Pty) Ltd compliment slip. If the amount to be paid is more than R5 000, it is paid by EFT and not by cheque.

4. To pay creditors over R5 000, Mary Rooseveld accesses the electronic funds transfer facility on her computer and compiles a schedule of payments to be made by EFT to creditors. She obtains this information from the creditors list prepared by Stella Stirling. She carefully checks the details, namely the bank, branch code and account number of the creditor to be paid against a hard copy listing which she keeps for all creditors.

5. Stella Stirling passes the creditors list to Dean Ramjan, as he is solely responsible for the cash payments journal, namely writing it up, posting transactions to the general ledger and reconciling the cash receipts and payments journal to the bank statement monthly.

REQUIRED:

Identify the weaknesses in the payments system described by Peter. For each weakness you identify, explain briefly why you consider it to be a weakness (i.e., what can go wrong because of this weakness).

QUESTION 2

Perfect Pizza (Pty) Ltd operates a comprehensive online ordering system for its pizza delivery service. The sales cycle begins when a customer, having created an account and logged in to verify their identity and delivery details, places an order through the company's website. The order details, including the type of pizza, size, additional toppings, delivery address, and payment method, are entered by the customer

Upon submission, the system generates an order confirmation email that is sent to the customer, providing a summary of the order and a unique order number for reference. This unique order number serves as a control to track and manage the order throughout the process.

Simultaneously, the order details are automatically sent to the kitchen staff via the company's internal order management system. The kitchen staff receives a digital "pick list" that details the ingredients needed for each order. This list is generated based on the type and size of the pizza and any additional toppings selected by the customer. The system checks the availability of ingredients in real-time as orders are placed, preventing orders from being accepted if there are insufficient ingredients in the inventory.

Once the pizza is prepared, it is handed over to the delivery team. The delivery team uses a digital dispatch system that assigns orders to drivers based on the delivery location. Each driver is equipped with a handheld device that displays the delivery address, order details, and the unique order number. The device also has GPS functionality to guide the driver to the delivery location, ensuring timely delivery.

Upon delivery, the customer is required to sign a digital receipt on the driver's handheld device, confirming that the order has been received. This digital signature provides a record of the transaction and helps to prevent disputes. If the payment method selected was cash on delivery, the driver collects the payment at this point and records the transaction on their device. If the payment was made online, the driver simply confirms the delivery on their device.

The information from the driver's device, including the signed receipt and payment details (if applicable), is then automatically synced with the company's central database. This updates the status of the order in the system to "delivered" and triggers an automatic email to the customer confirming the successful delivery of their order. This final step serves as a control to ensure that all orders are accounted for and that customers are informed of the completion of their orders.

REQUIRED:

Identify the controls embedded in the above sales description and design an appropriate test of control for each of the controls identified.