While conducting procedures on various cycles on the audit of Hallmark (Pty) Ltd, a wholesaler of stationery and paper
products, the following situations arose:
1. Several supplier invoices (purchases) which had subsequently been paid were found which were not made out to
Hallmark (Pty) Ltd.
2. While reperforming the calculation of overtime hours on a sample of clock cards, several errors, all of which favoured
the wage earner, were identified. A trainee also noticed that some overtime hours recorded on the clock cards had not
been authorised as required.
3. No sales invoices had been raised for a number of Hallmark (Pty) Ltd dispatch (delivery) notes which had been signed
by the customer and matched to the customer’s order.
4. VAT on all the sales for the month of January (financial year end 31 March) had been charged at 10% (instead of 15%)
due to an error in processing. By year-end no correction of this error had taken place.
5. A sample of test counts of different inventory items on the warehouse floor revealed that some of the items were not
included on the inventory sheets at the year-end inventory count.
6. A batch of goods received notes for goods received in the last week of the financial year had not been matched to
supplier invoices at year-end, and hence the corresponding purchase had not been raised.
7. A number of credit sales made in the first two weeks of the new financial year were included in the March sales due to
a mix up with dates on the dispatch notes.
8. Numerous errors were found in the depreciation calculations for plant and equipment.
You are required to:
Identify the assertions which would be affected by each of the above points (1 - 8) and explain for each assertion
identified why that specific assertion would be affected.