You are a trainee auditor on the audit of Doogle $($Pty$)$ Ltd $($Doogle$)$ for its financial year ending $30$ September $2023.$ Doogle is a wholesaler of laptops and tablets. You have been tasked with auditing certain aspects of the company$$s Revenue & Receipts Cycle. All sales to customers are on credit and very little computerisation is used in the company$$s business processes. From enquiries with Doogle$$s staff and from your observation of the Revenue & Receipts Cycle activities, you have noted the following:

a$)$ Credit Management

Retail customers wishing to open a credit account with the company must phone Doogle$$s credit controller and provide their business details. The credit controller then enters the customer$$s details on the computer system and sets a credit limit for the customer$$s account based on the customer$$s credit needs. You have determined that sound controls are in place regarding the identification of long outstanding and uncollectable debt.

b$)$ Sales orders and approval

Customers place sales orders with Doogle by telephone. Any one of two sales order clerks write down the order on a bank notepad after requesting the customer$$s account number. The sales clerk ensures that the account exists by referring to an official list of customers $($prepared on a daily basis from the debtor$$s ledger by the credit controller$)$ and that the customer is still within his$/$her credit limit$.$ After writing the order quantities and inventory codes of products ordered, the order clerk signs and dates the order as evidence of approval. You have not identified any concerns regarding the picking of goods.

 

REQUIRED:

 

Identify and discuss the internal control weaknesses and associated risks in the above description of the Revenue & Receipts Cycle at Doogle. Also describe the recommended control$($s$)$ that should be put in place in order to prevent the consequences associated with each risk for each identified weakness.

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