Question $1[35$ marks$]$

WAYVZ is a local company selling frozen and other consumer goods. The company purchases most of its goods locally and also imports poultry products due to the shortage of poultry products in the Namibia. The company has a wide range of customers which consists of companies and individuals. The company dispatches its goods from the warehouse as well as a retail shop on the premises for walk$-$in$,$ cash paying customers. Orders are received through emails, telephonically or walk in from customers by the Sales Clerks. Each Sales Clerk has a reference sales code they should include on the sales invoices. On occasion, the Sales Clerks share the reference codes and access on the sales system to process sales.

For customers purchasing on credit, the customer completes a credit application for and submits to the Sales Manager together with the related proof of their company registration, individual identification documents, proof of address and authority from its directors to transaction$/$make purchases. The credit application forms are reviewed and signed off by the Sales Manager and are approved based on WAYZ$$s credit approval limits as follows$$:

$$ N$$1-$ N$$2000,$ the Sales Manager can approve

$$ N$$2001-$ N$$10000,$ the Sales Manager and the Finance Manager

$$ N$$10001-$ N$$50000,$ the Sales Manager and the Head of Finance

$$ Above N$$50001,$ the Sales Manager, the Head of Finance and Managing Director

These credit application forms are captured by a Data Clerk within the Finance department and approved on the system by the Sales Manager and the Head of Finance. The Sales Manager verbally obtains approval from the Head of Finance and can override the credit limit set for each debtor as he has access to the IT Manager$$s password to do in case where the approvers are not available and the customer needs to purchase goods with a value above the approved credit limit$.$ The directors of the company are aware of this access but are more focused on the sales targets to demonstrate to the shareholder that there is growth in the business.

A sequentially numbered internal order is placed on the inventory system, based on the buying limit on the system. A sequentially numbered picking slip is generated in the warehouse and the picking Clerk receives the picking slip and prepares the goods for dispatch. The order is inspected by the Inventory Manager who approves and prints the delivery note $($in duplicate$)$ and signs off together with the picking slip. There are occasions when there is a large number of orders received and the Inventory Manager is not able to verify each order. The picking Clerk takes the signed delivery note to the Sales Clerks who then print a sequentially numbered sales invoice $($in triplicate$).$ The customer signs off the sales invoice or the customer$$s delivery truck driver. A copy of the signed invoice is retained by the Sales Clerk and the other by the Finance department. At the gate exit, the security officers check the goods and the delivery note and sign off and retain a copy at the gate. A copy of the delivery note is retained and also provided to the finance department for record keeping. The security officers also write in their dispatch book the details of the vehicle leaving the company premises with the purchased goods.

The company does not provide any transport to its customers and customers bring their own transport to collect the goods.

The cash$-$paying customers obtain a copy of the dispatch note and pay at the cashier office outside of the warehouse. A cash sales invoice is printed $($in triplicate$),$ for the cash office, the customer and the finance department. The cash customer then receives their goods and exist the premises. Both sales are recorded in one account.

Required:

a$.$ What are the internal control weaknesses which are present at WAYZ $[10]$

b$.$ Explain in detail the suggested recommendations to resolve the issues identified $[15]$

c$.$ If you are the auditor of the entity, what substantive procedures can be performed over the revenue and receipt cycle for WAYZ $[10]$