You are a Senior Auditor for a client called FishMart $($Pty$)$ Ltd $($FishMart$).$ FishMart manufactures fishing equipment such as fresh and saltwater rods, reels, hooks, lures, lines and all other accessories with a $31$ August $2024$ financial year$-$end. The fishing equipment is distributed to retailers and wholesalers.

Raw materials and consumables are ordered from various suppliers locally and internationally. Suppliers are paid using different methods, namely cash from petty cash for small consumable purchases or electronic funds transfer for raw material purchases.

Placing of orders

FishMart has a list of approved suppliers and prices that order clerks use when ordering goods from suppliers. To place an order, the order clerk logs in to the system with a unique username and password. After logging in$,$ the order clerk enters the supplier code, and the system displays a standard order form populated with supplier details. FishMart has a feature in the order software that helps predict what they are ordering, which assists the order clerk. They start typing the description, and the system suggests the full description, which they can choose from. Then, the order clerk enters how many of each item they require. The system populates the price per unit and calculates the total cost of the order. It also verifies that all the necessary information is entered correctly. Once everything is confirmed and verified, the order is sent to the supplier. This helps FishMart streamline the ordering process and ensures that the order clerks follow the appropriate steps.

Delivery of goods

When goods are received at FishMart, the goods are brought to a specific area designated for receiving and access to this area is restricted. There are two clerks responsible for receiving the goods. They inspect the quantity and description of the actual goods received and compare these goods with the delivery note and the original order form. They also check the quality and the condition of the items. After checking everything, they create the Goods Received Note $($GRN$)$ document. Both clerks electronically sign the GRN$,$ and then the items are taken to the storage area. This process ensures that FishMart receives the right products in good condition and keeps everything organised.

Findings during the audit

During the execution phase of the audit, when you were testing the trade payables, you came across the following matters:

$$Invoices for raw materials, from the supplier ABC Limited, that do not appear to exist in FishMart$$s financial records.

$$FishMart makes the majority of its purchases from foreign suppliers.

$$FishMart made many purchases on credit, for which the goods were received right before year$-$end, on $31$ August $2024.$ However, the supplier invoices were only recorded on $15$ September $2024.$

$$Five invoices from supplier XYZ $($Pty$)$ Ltd were not in the name of FishMart.

$$The creditors' age analysis balance as at the $30$ August $2024$ did not agree to the creditors$$ ledger and trial balance. A material difference of R$15500000$ existed, which was attributable to an understated balance in the creditors$$ ledger and trial balance.

REQUIRED:

$1\mathrm{.}1$ Based on the information presented under both sections, placing of orders and delivery of goods, formulate the test of controls you would perform related to placing of orders and delivery of goods for FishMart $($Pty$)$ Ltd$.$

$(10$ marks$)$

$1\mathrm{.}2$ Based on the information presented below the heading findings during the audit, identify the risk of material misstatement at an assertion level for trade payables and provide the assertions for each risk identified.

Set your answer out in the following table:

Description of risk of material misstatement xxxx Assertions xxxx

$(10$ marks$)$

$1\mathrm{.}3$ Formulate substantive procedures you will perform over the occurrence of the payments made to suppliers.

$(5$ marks$)$