You are the audit senior on the audit of Sweets Galore (Pty) Ltd. During the planning...
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You are the audit senior on the audit of Sweets Galore (Pty) Ltd. During the planning phase, of gaining an understanding of the organization, you gathered the following information: 1. Sweets Galore (Pty) Ltd is a subsidiary of Sweets in Heaven Ltd. The holding company has numerous subsidiaries, all of which are in the sweet industry. Subsidiaries are required to comply and report on their compliance with group corporate governance policies. 2. Sweets Galore (Pty) Ltd sells sweets to the general public through its 25 retail outlets situated in shopping malls around the country. It has a central warehouse at the head office in Johannesburg, from where inventory is sent to the outlets. 3. Sweets from Heaven Ltd has a large internal audit department that it uses to carry out risk evaluations and internal control and systems reviews at its subsidiaries. 4. Sweets Galore (Pty) has standardized accounting systems and related internal controls at all its outlets for example, all branches use the same in house developed software. Branches are not linked to head office. A small IT department is located at head office. 5. The outlets send standardized monthly reports on sales, cash flow, sundry expenditures etc. to head office. 6. Profit margins are not high, overall revenue has declined and certain outlets are starting to show monthly trading losses. The declines in revenue are attributed to competition in the sweet industry, particularly from online sweet purchases and reductions in consumer spending. 7. The outlets sell only for cash or by credit card. No accounts [debtors] are operated. 8. Each outlet operates its own bank account at branches of Nedbank located in the shopping mall in which the outlet is situated. 9. Sweets Galore (Pty) Ltd must present its year end audit pack to Sweets from Heaven Ltd, within 21 days of the financial year end, 31st March. 10. The annual inventory count takes place simultaneously at all outlets and at the head office warehouse, after the close of business on 31st March, to ensure that there is no disruption to trading. You are required to: Indicate how each of the above points [1-10] will affect your audit strategy for the upcoming audit. (25) You are the audit senior on the audit of Sweets Galore (Pty) Ltd. During the planning phase, of gaining an understanding of the organization, you gathered the following information: 1. Sweets Galore (Pty) Ltd is a subsidiary of Sweets in Heaven Ltd. The holding company has numerous subsidiaries, all of which are in the sweet industry. Subsidiaries are required to comply and report on their compliance with group corporate governance policies. 2. Sweets Galore (Pty) Ltd sells sweets to the general public through its 25 retail outlets situated in shopping malls around the country. It has a central warehouse at the head office in Johannesburg, from where inventory is sent to the outlets. 3. Sweets from Heaven Ltd has a large internal audit department that it uses to carry out risk evaluations and internal control and systems reviews at its subsidiaries. 4. Sweets Galore (Pty) has standardized accounting systems and related internal controls at all its outlets for example, all branches use the same in house developed software. Branches are not linked to head office. A small IT department is located at head office. 5. The outlets send standardized monthly reports on sales, cash flow, sundry expenditures etc. to head office. 6. Profit margins are not high, overall revenue has declined and certain outlets are starting to show monthly trading losses. The declines in revenue are attributed to competition in the sweet industry, particularly from online sweet purchases and reductions in consumer spending. 7. The outlets sell only for cash or by credit card. No accounts [debtors] are operated. 8. Each outlet operates its own bank account at branches of Nedbank located in the shopping mall in which the outlet is situated. 9. Sweets Galore (Pty) Ltd must present its year end audit pack to Sweets from Heaven Ltd, within 21 days of the financial year end, 31st March. 10. The annual inventory count takes place simultaneously at all outlets and at the head office warehouse, after the close of business on 31st March, to ensure that there is no disruption to trading. You are required to: Indicate how each of the above points [1-10] will affect your audit strategy for the upcoming audit. (25)
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Answer rating: 100% (QA)
1 A subsidiary of Sweets in Heaven Ltd The fact that Sweets Galore is a subsidiary of a larger organization Sweets in Heaven Ltd means that group corporate governance policies will apply This will req... View the full answer
Related Book For
Auditing A Practical Approach
ISBN: 9780730382645
4th Edition
Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton
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