QUESTION $330$ Marks

Thando Mashabane has a master$$s degree in internal auditing and is a certified internal auditor $($CIA$).$ Thando had been working in the internal auditing department of a South African listed company for almost $15$ years and held the position of deputy to the chief audit executive $($CAE$)$ when he decided to resign from the company to set up his own internal audit consulting practice.

During the years that Thando worked at the company, he was exposed to a wide variety of assurance and advisory internal audit engagements. He advised senior management and the board of directors on various financial, operational, information technology$-$related and fraud risk issues.

Bon Voyage Travels, a private company in the travel industry, intends to buy the majority shares in Time Square Casino $($Pty$)$ Limited, a company that owns several casinos and hotels throughout South Africa. Bon Voyage Travels does not have suitable knowledge of the hotel industry to take over the management of Time Square Casino and will therefore have to rely on Time Square Casino$$s current systems, management and workforce to continue operating as usual. Realising that they will have to rely heavily on Time Square Casino$$s staff, and with the consent of Time Square Casino, Bon Voyage Travels$$ board of directors approaches Thando$$s internal audit consulting practice to conduct an internal audit of the human resources processes at Time Square Casino.

Thando assigns two of his temporary staff members to help him with this engagement and instructs them to scrutinise all board meeting minutes as well as all internal audit reports and external audit management reports issued by Time Square Casino$$s board of directors since January $2022$ for findings that may indicate risks pertaining to human resources processes. They present Thando with the following list of comments and findings extracted from the minutes and reports:

$1.$

Formal job descriptions do not exist for most of the positions in the organisation.

CONFIDENTIAL

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October$/$ November $2024$

$2.$

Authority and responsibilities assigned to a key staff member in the administration office at one of the hotels contravene basic principles of maintaining effective segregation of duties.

$3.$

Newly appointed employees do not receive a copy of HR policies and procedures or the Code of Conduct upon employment and employees do not all receive regular updates on HR policies.

$4.$

Owning to a scarcity of qualified hotel management staff, Time Square Casino has engaged in an arrangement with an elite hotel school to employ several of their qualifying students annually on a contract basis for a maximum of two $(2)$ years.

$5.$

The average working experience of permanent staff at Time Square Casino is three $(3)$ years.

$6.$

An article appeared in a prominent newspaper about the hotel school$$s best qualifying chef in $2022$ who is now employed as the main chef at one of Time Square Casino$$s new hotels.

REQUIRED

Marks

$3\mathrm{.}1$

Study the above scenario and develop a risk and control matrix of the human resources processes of Time Square Casino $($Pty$)$ Limited.

Structure your response as follows:

Risks

Controls

$20$

$3\mathrm{.}2$

Formulate audit procedures that the internal auditor would perform to establish whether the controls over staff recruitment are adequate and in accordance with the policies.