Question C2 - Case Study 2 (20 marks) You are the Chief Financial officer if Hi Tech World Ltd. the external audit team from Young & Serious[Y&S) have just complete the audit which you believe went well. During an audit review meeting with the Audit Partner, the Lead audit manager, your CEO and yourself a report is provided by Y&S which highlights potential internal control issues in relation to your systems and associated procedures. The key areas of concern included the Expenditure and general ledger procedures. An extract of the issues raised and the potential risk is as follows Area/Activity Risk/Issue observed during audit Expenditure /Account payable Requests for Supplies It was observed during the audit that in some instances requests for supplies and inventory were over estimated While in some cases inventory requests Supplier being chosen Purchasing from unauthorized suppliers, potentially paying too much or not adhering to supplier contract Purchase orders Not purchasing from approved suppliers provides the opportunity for kickbacks to occur with key purchasing personnel and non-approved suppliers Accepting the delivery Not all goods were received were checked by the receiving officer, this could result in: Theft of inventory Accepting low quality or damaged goods Approving the invoice On a number of occasions it was identified that supplier invoices were not paid within the period in order to receive discounts. This represents a cost to the organisation Accepting the delivery Data entry errors were detected by the goods receiving officer General ledger Extracting and validating data It was observed that incomplete and inaccurate data was updated to the general ledger Question C2 - Case Study 2 (20 marks) You are the Chief Financial officer if Hi Tech World Ltd. the external audit team from Young & Serious[Y&S) have just complete the audit which you believe went well. During an audit review meeting with the Audit Partner, the Lead audit manager, your CEO and yourself a report is provided by Y&S which highlights potential internal control issues in relation to your systems and associated procedures. The key areas of concern included the Expenditure and general ledger procedures. An extract of the issues raised and the potential risk is as follows Area/Activity Risk/Issue observed during audit Expenditure /Account payable Requests for Supplies It was observed during the audit that in some instances requests for supplies and inventory were over estimated While in some cases inventory requests Supplier being chosen Purchasing from unauthorized suppliers, potentially paying too much or not adhering to supplier contract Purchase orders Not purchasing from approved suppliers provides the opportunity for kickbacks to occur with key purchasing personnel and non-approved suppliers Accepting the delivery Not all goods were received were checked by the receiving officer, this could result in: Theft of inventory Accepting low quality or damaged goods Approving the invoice On a number of occasions it was identified that supplier invoices were not paid within the period in order to receive discounts. This represents a cost to the organisation Accepting the delivery Data entry errors were detected by the goods receiving officer General ledger Extracting and validating data It was observed that incomplete and inaccurate data was updated to the general ledger