QUESTION $1$

Age Care Ltd $($Age$)$ makes and sells mobility aids that are for the benefit of elderly people as well as disabled adults and children. It has warehouses across the country and its customer base includes retailers as well as individuals, to whom direct sales are made through their website. The company's year end is $31$ December $2023.$ Waterhouse are Age's external auditors. You are an audit supervisor at Waterhouse. You are currently reviewing the documentation of Age's internal controls in preparation for the interim audit.

Age's website allows individuals to order goods directly, and full payment is taken in advance. Currently the website is not integrated into the inventory system and inventory levels are not checked at the time when orders are placed.

Goods are dispatched via local couriers; however, they do not always record customer signatures as proof that the customer has received the goods. Over the past $12$ months there have been customer complaints about the delay between sales orders and receipt x'of goods. Age has investigated these and found that, in each case, the sales order had been entered into the sales system correctly but was not forwarded to the dispatch department for fulfilling.

Age's retail customers undergo credit checks prior to being accepted and credit limits are set accordingly by sales ledger clerks. These customers place their orders through one of the sales team, who decides on sales discount levels.

Raw materials used in the manufacturing process are purchased from a wide range of suppliers. As a result of staff changes in the purchase ledger department, supplier statement reconciliations are no longer performed.

Additionally, changes to supplier details in the purchase ledger master file can be undertaken by purchase ledger clerks as well as supervisors.

Required:

In respect of the internal control of Age Care Ltd $($Age$)$:

$($i$)$ Identify and explain THREE internal control deficiencies.

$($ii$)$ Recommend a control to address each of these deficiencies.

$($iii$)$ Describe a test of control Waterhouse would perform to assess if each of these.

Note: Prepare your answer using three columns headed Control deficiency, Control recommendation and Test of control respectively.