You are a second year audit trainee at REKP Inc., a local medium-sized audit firm in Pretoria. You are currently busy with the 31 March 2020 year-end audit of the Menlyn branch of Shopright Ltd (hereafter Shopright), Africas largest food retailer that operates in more than 2 934 outlets in 15 countries across Africa and the Indian Ocean Islands. The companys headquarters are situated in the Western Cape province of South Africa and as of 2019, they have employed more than 147 000 people. With over 22 million shoppers, they continue to provide many communities with a variety of food products, household goods and small appliances at the lowest possible prices. Together with a few other trainees, you are responsible for the audit of total purchases of R380 567 and total creditors of R140 435 of the Menlyn branch. Because the audit needs to be finished within the next week, the other trainees have already performed the majority of the work and the audit manager has asked you to complete some of the outstanding tasks. These outstanding tasks are as follow:

Outstanding task 2 The warehouse manager at Shopright has mentioned to your audit manager that he is worried that the controls in the warehouse are not functioning effectively. As the controls form part of the purchase (acquisition) and payment cycle that you are auditing, the audit manager has requested you to identify any possible weaknesses. You have asked the goods receiving clerk what his responsibilities are when the goods are delivered by the suppliers, in order to identify any possible weaknesses in the warehouse goods receiving function of Shopright. His response was as follow: I am responsible for receiving goods in the designated goods receiving section of the warehouse, which is physically secured (including surveillance cameras) and access controlled. On arrival of the delivery vehicle, the goods are offloaded in my presence. I obtain the supplier delivery note (DN) from the delivery personnel and by referring to the purchase order (PO) number thereon, locate the PO (which have been filed numerically in my office). I check the quantity of the goods being delivered, against the PO and the suppliers DN. I reject any incorrect deliveries by sending it back with the suppliers delivery personnel. I accept goods that are short delivered but identify such goods clearly on the suppliers DN and the PO. I then issue a pre- printed, pre-numbered, multi-copy (5) goods received note (GRN) on which I include only those goods which I have accepted. I ensure that the suppliers delivery personnel, as well as myself, sign both copies of the DNs, including those with amendments, e.g. identification of short deliveries. On transferring the goods to the warehouse, the warehouse clerk compares the quantity and description of the goods to the GRN to ensure that it agrees. I then sign the GRN as acknowledgement of delivering the goods. Any discrepancies are immediately reported to the warehouse manager

You are a second year audit trainee at REKP Inc., a local medium-sized audit firm in Pretoria. You are currently busy with the 31 March 2020 year-end audit of the Menlyn branch of Shopright Ltd (hereafter Shopright), Africa's largest food retailer that operates in more than 2 934 outlets in 15 countries across Africa and the Indian Ocean Islands. The company's headquarters are situated in the Western Cape province of South Africa and as of 2019, they have employed more than 147 000 people. With over 22 million shoppers, they continue to provide many communities with a variety of food products, household goods and small appliances at the lowest possible prices. Together with a few other trainees, you are responsible for the audit of total purchases of R380 567 and total creditors of R140 435 of the Menlyn branch. Because the audit needs to be finished within the next week, the other trainees have already performed the majority of the work and the audit manager has asked you to complete some of the outstanding tasks. These outstanding tasks are as follow: SUI . 6 x REQUIRED: 1.1 With reference to outstanding task 1: Discuss any six (6) business risks as part of the retail industry specifically related to Shopright's inventory. For each business risk identified, discuss the possible impact that the risk could have on Shopright's business. 6 x SUI . 6 x REQUIRED: 1.1 With reference to outstanding task 1: Discuss any six (6) business risks as part of the retail industry specifically related to Shopright's inventory. For each business risk identified, discuss the possible impact that the risk could have on Shopright's business. 6 x