QUESTION $4(30$ marks$)$ MAC$4867$ OCTOBER$/$NOVEMBER $2024$ You have been appointed as the new internal auditor of Studres $($Pty$)$ Ltd$,$ a construction company that zcc specialises in building student accommodation. The primary goal of these accommodations is to provide affordable and quality housing options for university and college students, ensuring a safe and conducive living environment for their academic success. Studres $($Pty$)$ Ltd collaborates closely with educational z institutions and government agencies, as some projects are partially funded by public subsidies to make the accommodation affordable to students. The company's head office is located in Cape Town, with construction sites spread across the Northern Cape. Studres $($Pty$)$ Ltd is planning to expand its operations to the Southern and Central regions of the z Western Cape. Mr$.$ Patel, the recently appointed Financial Manager of Studres $($Pty$)$ Ltd$,$ asserts that a robust control zcc environment serves as the cornerstone for all other components of internal control, establishing the necessary structure and discipline essential for effective governance. In line with this belief, he has tasked the internal audit team with conducting a comprehensive review of all operational cycles to identify potential weaknesses. This initiative aims to facilitate a thorough assessment and enhancement of the organisation$$s internal controls, thereby strengthening the overall risk management framework. You are currently assessing the acquisition and payment system, and after consulting with Mr Patel, you've decided on the following. $1.2.3.4.5.$ Quantity surveyors at the main office prepare a detailed list of supplies for each new project $($materials list$).$ The project's construction manager then approves it$.$ The original is retained in case there are any questions, and a copy is sent to the site administration office $($see below$),$ the original will be maintained in case there are any questions. Studres zcc $($Pty$)$ Ltd has a policy of only working on four projects at a time. This enables the corporation to hire four administrative teams, each with three clerks, who rotate from one project to the next as they are done. Site managers and foremen $($one for each project$)$ oversee the construction and physical protection of building supplies in stock, while administrative teams oversee ordering and receiving goods from vendors, paying wages, and keeping inventory records. For the building to be efficient, functions must be performed on the project site. All purchases are made with a credit card. When a senior administration clerk arrives at a new project site, he will open accounts with any additional suppliers in the area that he considers necessary, project locations are sometimes geographically distant and using existing suppliers is inefficient and costly$.$ As items are required, the site foreman will request that they be purchased from the site's senior administration clerk. After double$-$checking the details of the supplies required against the material list, the clerk places a phone order with the requisite supplier. If the items requested are not on the material list, the administration clerk needs the foreman to submit a formal, signed request. When the items are delivered to the job site, the senior administration clerk verifies them to the supplier's delivery note, signs and maintains a duplicate in case the supplier doesn't send an invoice. $($With certain suppliers, an invoice is included with the shipping.$)6.$ MAC$4867$ OCTOBER$/$NOVEMBER $2024$ When the supplier's invoice arrives at the site, the senior administration clerk compares the invoice's details to the delivery note and files it$.7.$ The only component of the acquisitions and payments cycle that is computerized is how our debtors pay us$.$ All debtor's payments are received by electronic money transfer to the head office. REQUIRED: $4\mathrm{.}14\mathrm{.}2$ Identify and explain weaknesses in the internal control procedures for purchases as described in points $1$ to $7$ and recommend the improvements that should be made. $(21$ marks$)$ Discuss how Internal Audit should contribute to the effectiveness of internal control in Studres Ltd$.($Pty$)$ zcc $(9$marks$)$