QUESTION $4$

$(20)$

At Paws & Whiskers Pet Supplies $($Pty$)$ Ltd$,$ the purchasing process begins when inventory levels drop below the minimum stock threshold set in the store's inventory management system, PawTrack. When this happens, the system automatically flags items for replenishment and generates a low$-$stock alert for the purchasing officer to review. Every morning, the purchasing officer, Sam, checks the flagged items in PawTrack and cross$-$references them with recent sales trends to determine if an order is necessary. If so$,$ a purchase requisition $($PR$)$ is generated in PawTrack, detailing the required stock, and is sent electronically to the store manager for approval before proceeding.

Once approved, Sam selects a supplier from the Approved Vendor List $($AVL$)$ stored in the store's procurement system, WhiskerBuy. To ensure that purchases are made only from authorized suppliers, WhiskerBuy restricts orders to pre$-$approved vendors, preventing unauthorized purchases. After selecting the vendor, Sam creates a purchase order $($PO$)$ in WhiskerBuy, specifying product quantities, unit prices, and expected delivery dates. The PO is automatically assigned a unique PO number and must be

electronically approved by the store manager in the system before being sent to the supplier.

Suppliers deliver shipments directly to the receiving area at the back of the store, where Jordan, the receiving clerk, verifies each delivery. Using a tablet linked to PawTrack, Jordan checks the delivery against the PO and the supplier's delivery note, ensuring that the correct quantities and items have arrived. If there are discrepancies, such as missing or damaged goods, Jordan logs the issue in PawTrack, which automatically notifies Sam and the store manager for resolution before the delivery is fully accepted.

Once verified, Jordan uses the tablet to update the stock records in PawTrack in real time, ensuring the store's inventory is accurate and up to date. This prevents stock discrepancies and helps sales staff know what is available on the shop floor.

The supplier then emails the invoice to the accounts payable department, where Lisa, the finance clerk, matches the invoice against the approved PO and the receiving report to confirm that the invoiced amount aligns with what was ordered and received. This three$-$way matching process is completed in WhiskerBuy, ensuring that payments are only made for legitimate transactions.

Once verified, Lisa submits the payment request through the store's accounting system, FurFunds, where the store manager reviews and authorizes the payment. Payments are strictly processed via electronic funds transfer $($EFT$),$ and FurFunds requires dual authorization$-$one from Lisa and a second from the store manager$-$to prevent fraudulent transactions. The system automatically logs all payments and attaches invoice numbers to supplier records for easy tracking and reconciliation.

You are required to:

$4\mathrm{.}1$ Based on the above information regarding the purchases cycle of Paws & Whiskers Pet Supplies $($Pty$)$ Ltd:

$4\mathrm{.}1\mathrm{.}1$ Identify the key controls present in the purchases cycle.

$4\mathrm{.}1\mathrm{.}2$ Explain for each key control identified what risk this control lowers to an acceptable level.

$4\mathrm{.}1\mathrm{.}3$ Formulate the tests of control you will perform when testing the identified key controls.

Present your answer using the following structure:

$\backslash$table$[[\backslash$table$[[$Key Controls$],[$Identified$]],$Risk Lowered to Acceptable Level,Tests of Control$],[\backslash$table$[[$List the key control$],[$identified$.]],\backslash$table$[[$Explain what risk the control lowers to an$],[$acceptable level $($e$.$g$.,$ what would go$],[$wrong if the control was not present$).]],\backslash$table$[[$List the test of control you will$],[$perform to test the identified$],[$control$.]]]]$