You are an experienced audit manager at Samway Baker Fitzgerald (SBF), an accounting firm with offices in Orange, Wagga Wagga, Tamworth, Port Macquarie and Albury in NSW, Toowoomba in Queensland and Ballarat in Victoria. Although a medium-sized firm by national standards, SBF includes Australias largest regionally-based auditing practice. Most of SBFs audit clients are in the manufacturing and service industries. SBF recently acquired a major new audit client, Dudley Health Limited (DHL), which fully owns:

• St Neville's, a highly regarded private hospital located in Tamworth
• Acuity Vision, a network of day surgery clinics across NSW and Queensland
• Pellegrino Shores, a retirement village located in Port Macquarie

Its a chilly evening in early July 2019 and you are meeting with your audit senior, Jek Porkins, to discuss the findings of his preliminary work for the 30 June 2019 audit of DHL.

Acuity Vision sales team : During the financial year, Acuity Vision released its own range of medical supplies which are sold via direct marketing by a sales team employed by Acuity. The sales team receive a fairly low base salary plus a bonus based on the dollar value of the sales they generate. Jek Porkins selected a sample of customer payments received by Acuity just after year end and traced them back to the general ledger and customer account balance.

DHL accounts payable

Whilst on site at DHL's Head Office in early July, Jek Porkins undertook two accounts payable tests:

Test	Result	Conclusion
1	15 suppliers were selected from the list of trade creditors at year-end. Balances were traced to supplier invoices and goods received notes to ensure goods were received prior to year-end. For two creditors out of 15 tested the balance was only marginally overstated.	Accepted as no material errors were located.
2	Selected 20 suppliers' invoices and checked that the pricing and discount terms have been reviewed and authorised by the purchase manager. Three out of the 20 invoices tested had not been authorised and incorrect discounts had been applied to them. A follow up of the three samples with deviations did not highlight a pattern or specific reason for the errors.	Accepted as the errors in discounts claimed were immaterial.

Question:

Additional information required in relation to Acuity Vison's sale of medical supplies. Specifically:

1. the key account balance(s) and associated assertions at risk due to Acuity Vision's arrangements for paying its sales team
2. the implications for the control environment within DHL, including specific issues management would need to consider
3. the effectiveness of his customer payments testing . Write a memo to Jek Porkins