Your audit firm has recently been appointed as auditors of Body Care Products Ltd (BCP). The company is distributor of body care products in Guruve area and its financial year end of 30 April as its reporting period.

Company background

In 2007, BCP was incorporated as a small enterprise which has since grown into a popular company in terms of body care products. The products range from anti-ageing, pigmentation, acne, scarring, stretch marks and many others. It has its headquarters and main warehouse in Harare, Zimbabwe, which supply top of the range body products to the market.

BCP offers the products listed below:

• Cleansers and toners, Facials; Moisturisers and Sun protection.

The following working papers have been compiled by your team for the 2019 reporting period:

Working	Paper	Working Paper Description
CC1100		System Description: Revenue and Receipt Cycle
GG5500		Audit Instructions: Petty Cash
Client: Body Care Ltd			Period end:28 Febru		ary 2018
Prepared by: G. Klaus			Date: 10 March 2018
Reviewed by:			Date:			CC1100/1
System Description: Revenue and Receipts Cycle

REVENUE AND RECEIPT SYSTEM DESCRIPTION

Orders

All orders are received via email or fax and no telephone orders are accepted. The company also sells on credit.

When the orders are received by the order clerks, they first check whether the products are available on the system. Once it has been established that products are available on the system, the order is then sent through to the storemen, who then picks up the products from the warehouse. If the inventory is not available, the customer order is temporarily filed in a pending file which is attended to on an ad-hoc basis by the sales manager, Eddie Gora.

Picking and collection

The goods are picked by the storemen and placed at the despatch with the customer order. The despatch clerks then prepare a pre-numbered collection note from the customer order. Customers are then notified that their goods are ready for collection.

Customers collect their products together with the collection note from despatch, since the company does not deliver them. Customers exit the premises through the security gate where their products are checked by the gate controller against the collection note and the invoice, prepared by Aldraide Mushe. If some items are missing as listed on the customer’s invoice, an X is placed next the missing items and a copy of the invoice made. The customer is given back the invoice in order to exit the gate, then the copy invoice is sent to the debtors’ administrator, Nyasha Zhou. Nyasha then passes a credit note for the missing items indicated on the invoice and sent to the customer later.

Client:	Body Care Ltd		Period end:		28-Feb-18
Prepared by:G Klaus			Date:	10 Marxh 2018
Reviewed by:			Date:			CC1100/2
System Description:		Revenue and Receipt Cycle

Invoicing

When sending a customer order to the warehouse, the order clerks send another one to Aldraide Mushe, the invoicing clerk. Aldraide then obtains the customer’s details, description, quantity and price of products ordered in order to prepare an invoice. Invoices and credit notes are pre-printed , prenumbered and multi- processed.

Aldraide Mushe places the top copy in a pending file on Nyasha’s desk, the second copy is taken to the gate controller, while the third copy is retained in the file.

Recording

Nyasha Zhou then takes the invoices from the pending file as well as the credit notes he has passed and records them regularly in the sales journal and debtors’ ledger.

Required:

With reference to Working Paper CC1100, identify and discuss any control weaknesses I the revenue and receipt cycle of Body Care Products Ltd, for each weakness identified, give recommendations for improvements.

Answer rating: 100% (QA)

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