E$-$groceries Limited $($E$-$groceries$)$ is an e$-$commerce retailer and the largest retailer

in South Africa with a financial year ending $30$ June $2024.$ E$-$groceries is listed on the

Johannesburg Stock Exchange $($JSE$)$ and registered for VAT.

The head office of E$-$groceries is situated in Cape Town, and there are warehouses in

each of the provinces in South Africa where they sell perishable goods online to

customers. Therefore, these goods must be delivered as soon as possible. The

customers consist of various locally$-$based individuals and businesses.

Online shopping

A customer can register online, and after registration, the customer can start shopping

online. The customer will select the type of groceries required and the quantity, and

thereafter, the products are added to a cart. When the customer has selected all their

goods, they can make a payment via electronic funds transfer $($EFT$).$ When the

customer is ready to make the payment, they must continue to checkout and insert the

necessary credit$/$debit card details. Once the credit$/$debit card payment via EFT is

successful, the customer$$s order goes to the warehouse department, where the

dispatch clerk will physically pick the groceries to be delivered to the customer.

Dispatch of goods

The warehouse department will pick the groceries, raise the picking slip together with

the delivery notes and send these to the dispatch clerks, Lynne Smith and Ben Finn.

Upon receipt of the groceries, picking slip and delivery notes, Lynne Smith and Ben

Finn perform the following:

$$ Verify the quantities and description of the groceries against the authorised

picking slip and delivery note.

$$ Sign the picking slip and delivery notes to acknowledge receipt of the groceries.

$$ Retain the two copies of the delivery note and return the signed picking slip to

the warehouse once the groceries are packed

$$ The groceries and delivery address are verified against the picking slip and

delivery note as the groceries are packed into the box for delivery. The boxes

are sealed immediately thereafter.

$$ Thereafter, a two$-$part list of deliveries is prepared by the dispatch clerks that

corresponds with the delivery notes and then the physical goods are loaded

into the delivery vehicle.

The delivery driver supervises the loading of the groceries into the delivery vehicle and

signs the two$-$part list of deliveries prepared by the dispatch clerks to acknowledge

receipt of the delivery notes and the groceries.

The driver retains one of the delivery lists and both of the delivery notes, and the

dispatch clerks retain the other delivery list.

When the driver leaves the premises, the security guard checks all the goods in the

delivery vehicle against the delivery list with the delivery note. The list of deliveries

shows the number of boxes to be delivered to a particular customer. Once the security

has completed the above checks, the security guard will then date stamp the two

copies of the delivery note.

Once the driver delivers the goods to the customer, the customer signs both copies of

the delivery note. The customer retains one copy of the delivery note, and the driver

returns the other copy to be sent to the accounting department of E$-$groceries to create

the invoice by the invoicing clerk, Matthew Fling.

Credit management

In May $2024,$ the Chief Financial Officer $($CFO$)$ decided to introduce selling goods on

credit to customers with the approval of the board of directors. The decision was based

on increasing sales and is targeted to the customers who purchase in bulk. The

implementation will happen after year$-$end.

$1\mathrm{.}1$ With reference to the dispatch of goods information, describe the test of

controls you would perform for the financial year ending $30$ June $2024.$

$(10$ marks$)$

$1\mathrm{.}2$ With reference to the credit management information, identify the risk of

material misstatement regarding the potential new trade debtors at an

assertion level and provide the assertions for each risk identified.

Set your answer out in the following table:

Description of risk of material

misstatement

Assertions

xxxx xxxx

$(12$ marks$)$

$1\mathrm{.}3$ Describe the substantive procedures you would perform over the money

received by customers via EFT for the financial year ending $30$ June $2024$ to

ensure that the EFT payments received by customers are valid.

$(8$ marks$)$

$1\mathrm{.}4$ Describe the analytical procedures you would perform related to the

revenue of E$-$groceries for the financial year ending $30$ June $2024.$

$(5$ marks$)$