Follow Up of Internal Cost Recoveries Internal Audit Report 202021

DOCUMENT TITLE Follow up of Internal Cost Recoveries Review Internal Audit Report
DATE 11 August 2020
AUTHORIZATION
NAME SIGNED DATE
Prepared 11 August 2020
Reviewed/ Approved 21 August 2020

AAAAASOC LIMITED
SYSTEMS AND COMPLIANCE AUDIT
Confidential
INTERNAL AUDIT
FINAL REPORT
AUDITABLE ENTITY: AAAAA SOC LTD
FUNCTIONALITY: INTERNAL AUDIT
REFERENCE: PDO-SYSAUD-RISK REGISTER-0001
PROJECT NAME: FOLLOW UP OF INTERNAL COST

RECOVERIES
AUGUST 2020
This report contains 23 pages
AAAAASOC Limited Page 2 of 23

Final Report – August 2020
CONTENTS
INTRODUCTION 6
SECTION A – EXECUTIVE SUMMARY
SCOPE 6
AUDIT OBJECTIVES 6
SOURCES OF INFORMATION 7
SAMPLING 7
FRAUD AND INTERNAL CONTROL 7
MANAGEMENT RESPONSIBILITY 8
RESPONSIBILITY FOR CORRECTIVE ACTION 8
SUMMARY OF FINDINGS 8
CONCLUSION 11
SECTION B – DETAILED AUDIT FINDINGS

FINANCIAL FRAMEWORK FOR INTERGROUP
13
TRANSACTIONS NOT SIGNED
CUSTOMERS NOT BILLING AS PER THE SIGNED
14
AGREEMENT
CLIENT INCORRECTLY INVOICED 16
INTERNAL COST RECOVERIES NOT FULLY
19
RECOVERED
INTERNAL AUDIT

11 August 2020
TO: MS
Dear Madam
FOLLOW UP OF INTERNAL COST RECOVERIES REVIEW INTERNAL AUDIT REPORT: AAAAASOC

LIMITED 2020/21
We have conducted a risk based audit review of the controls and compliance over the Follow up of Internal
Cost Recoveries for The AAAAASOC Limited in terms of the 2020/21 Internal Audit Plan as agreed and
approved by the Audit and Risk Committee.
The attached report has been set out into the following two sections:
Section A An Executive Summary documenting the objectives and scope of our work, a summary
of our findings and action plan.
Section B Contains the detailed findings on our review as well as recommendations for
improvement, management comments, action plan and implementation date.
Our report has been prepared for your information, and that of the management of The AAAAASOC
Limited. We do not accept responsibility to any other party to whom it may be shown or who on their own
volition may decide to rely on it.
We would like to express our appreciation to management and various members of staff who assisted us in
carrying out our work.
We would be pleased to provide you with further assistance and request that you do not hesitate to
contact Mr
YOURS FAITHFULLY
CTING HEAD OF INTERNAL AUDIT

FOLLOW UP OF INTERNAL COST RECOVERIES REVIEW INTERNAL AUDIT REPORT
AAAAASOC LIMITED SECTION A
AUGUST 2020
SECTION A
EXECUTIVE SUMMARY

AUGUST 2020
EXECUTIVE SUMMARY
1. INTRODUCTION
 The Internal Audit review focused on the adequacy and effectiveness of controls over the
Follow-up of Internal Cost Recoveries review performed at AAAAA SOC Ltd as set out in the
engagement letter dated 17 July 2020.
 Due professional care was exercised during the planning, execution and reporting of the results
in respect of the focus areas reviewed by us, however, absolute assurance cannot be given that
other non-compliance and irregularities do not exist, due to limited testing being performed
based on the risk based audit approach methodology, which is predominantly focused on high
risk and high impact areas.
 Our work consisted of discussions with management, together with evaluating a selected
sample of transactions and ensuring compliance to approved policies and procedures, as they
pertained to The AAAAASOC Limited.
 It should be noted that the Internal Audit was conducted in accordance with the PFMA, Treasury
Regulations and the Internal Audit Charter (mandate) as well as Standards for Professional
Practice of Internal Auditing. The Internal Audit Charter sets out the nature, role, responsibility,
status and authority of Internal Auditing". Internal Audit conforms to the International Standards
for the Professional Practice of Internal Auditing based on a quality review performed. The
procedures we performed did not constitute an examination or a review in accordance with
generally accepted auditing standards or attestation standards, except as may be specified in
this report or in our scope letter.
2. SCOPE
We have conducted the audit assignment in terms of the approved Internal Audit Plan for 2020/21.
The review was undertaken during July / August 2020 covering the period 01 April 2020 to 31 June
2020, and does not reflect any changes after this date.
Our review included the adequacy and effectiveness of controls that ensure mitigation of risks
regarding the Internal Cost Recoveries.
Our ffollow-up review and assessment included the adequacy and effectiveness of controls that
ensure mitigation of risks regarding the Internal Cost Recoveries Review Internal Audit Report
dated 15 October 2019
Furthermore, our assessment also included the following:
 To ensure compliance with the Financial Framework for Intergroup Transactions between
AAAAA and Subsidiaries
 To ensure cost are recovered in accordance with the Transfer Prices for Services and Products
and
 To ensure external tenants are charged in accordance with the Lease Agreement.
3. AUDIT OBJECTIVES
The objectives of our internal audit review are:
 Gain an understanding of the various areas under review with regards to processes and
controls;

AUGUST 2020
 Document a system description for the processes in order to enable us to efficiently and
effectively conduct the internal audit review;
 Review and appraise the controls included in the scope;
 Report to management any area of perceived weakness; and
 Make recommendations for improvement and identify non-compliance with control procedures.
4. SOURCES OF INFORMATION
Discussions were held with management and employees from the Finance Department and
relevant documentation was reviewed. Audit work was conducted on the basis of enquiry,
confirmation, and verification of supporting documentation and identified processes. Although key
controls provide management with its prime source of internal control, inherent limitations exist in
the reliance on controls as errors and lapses in control can result from carelessness,
misunderstanding of instructions, collusion between individuals and management override.
5. SAMPLING
The following sampling methodology was applied during the execution of our audit:
Assumed Number of Items to Test

Frequency of Population of
Control Control
Occurrences Low Mid High
Annual 1 1
Quarterly 4 2
Monthly 12 2 to 5
Weekly 52 5 10 15
Daily 250 20 30 40
Multiple times per

Over 250 25, 30 45 60
day
6. FRAUD AND INTERNAL CONTROL
Internal audit work is planned with a reasonable expectation of detecting significant control
weaknesses in the specific areas reviewed. However, internal audit procedures alone, even when
carried out with due professional care, do not guarantee that fraud will be detected. Accordingly,
our review as internal auditors should not be relied upon solely to disclose fraud, defalcation or
other irregularities, which may exist.
Management's attention is drawn to the fact that inherent limitations exist in the reliance on internal
controls and procedures as errors and lapses in control can result from misunderstanding of
instructions, collusion between individuals and management override of set controls.
It should be recognised that controls are designed to provide reasonable, but not absolute,
assurance that errors and irregularities will not occur, and that procedures are performed in

AUGUST 2020
accordance with management's intentions. There are inherent limitations that should be recognised
in the considering of the potential effectiveness of any system of controls. In the performance of
most control procedures, errors can result from misunderstanding of instructions, mistakes in
judgment, carelessness, or other personal factors. Control procedures can be circumvented
intentionally by management, either with respect to the estimates and judgments required in the
processing of data.
Further, the projection of any evaluation of control to future periods is subject to the risk that the
procedures may become inadequate due to changes in conditions and deterioration in the degree
of compliance with procedures.
7. MANAGEMENT RESPONSIBILITY
Management is responsible for the establishment and maintenance of an effective system of

governance to:
 Establish and communicate organisational goals and values.

 Monitor the accomplishment of goals.
 Ensure accountability and values are preserved.
Management is responsible for risk management.
Management is responsible for the process to:
 Identify, assess, manage and control potential events.
Management is further responsible for the establishment and maintenance of an effective system of
internal control. The objectives of the system of internal control are, inter alia, to provide
management with reasonable, but not absolute, assurance that:
 The organization's strategic objectives" forming part of the objectives of Internal Audit are
achieved.
 Risks are properly managed;
 Assets are safeguarded;
 Financial and operational information is reliable;
 Operations are effective and efficient; and
 Laws, regulations and contracts are complied with.
8. RESPONSIBILITY FOR CORRECTIVE ACTION
It is the responsibility of management to ensure that corrective actions documented are

implemented by the respective due dates. The impact and recommendations contained in this
report should not be considered to be an exhaustive list, but serve to highlight potential effects of
issues identified and possible remedial actions to improve the current control environment.
9. SUMMARY OF FINDINGS
Our internal audit revealed the following findings that have been summarised below. Details of the
control weaknesses identified have been provided in Section B. Accordingly, management should
ensure that the control weaknesses identified by our work is remedied in a timely manner.
It should be noted that there were no positive audit findings in the areas reviewed.

AUGUST 2020
The table below summarises the weaknesses noted in the sub-focus areas reviewed. Our detailed recommendations are included in Sections B of this report.
Audit Action Plan and Issue

Issue Description Page Status of issue
No. Finding Responsible Official Implementation previously
- Sub-Focus Area No. previously reported
Rating Date reported
SIGNIFICANT FINDINGS
1. Financial Framework for The document has been 13 - -

Intergroup Transactions not submitted to the office of the
signed [To ensure compliance Group Chief Financial
with the Financial Framework Officer for further signing
for Intergroup Transactions and approval.
between AAAAA and
21 August 2020
2. Customers not billed as per the REAM to send 14 2019/2020 Weakness previously
signed agreement [To ensure spreadsheets of the charges reported still prevails
external tenants are charged to external tenants, in
in accordance with the Lease accordance with the Lease
Agreement] Agreement, Transport and
Postal & Courier on a
monthly basis.
The relevant Financial

Officer to follow-up with Line
Management regarding the
outstanding information.
Immediately
3. Client incorrectly invoiced [To The Rental Spreadsheet will 16 2019/2020 Weaknesses
ensure cost are recovered in be reviewed and updated previously reported

AUGUST 2020
Audit Action Plan and Issue

Issue Description Page Status of issue
No. Finding Responsible Official Implementation previously
- Sub-Focus Area No. previously reported
Rating Date reported
accordance with the Transfer with the correct rates to still prevail
Prices for Services and ensure the client is correctly
Products ZZZZZ] invoiced.
Finance will go through all

the invoices and verify that
the correct information is
used for invoicing as under-
invoicing can result in loss
of income for AAAAA.
Immediately
4. Internal cost recoveries not fully Finance will engage with 19 2019/2020 Weaknesses
recovered [To ensure Subsidiaries and Line previously reported
compliance with the Financial Management to establish still prevail
Framework for Intergroup and agree on how the
Transactions between matter can be handled going
AAAAA and Subsidiaries [ forward.
Immediately

AAAAASOC LIMITED SECTION B
AUGUST 2020
 A summary of our ratings is attached in the table below:
In order to assist management with the allocation of resources to address the weaknesses and improve
controls as included in this section, we have assigned subjective ratings to each of our
recommendations. These ratings are for guidance purposes only and management must evaluate them
in light of their own experience and risk appetite. The key to these ratings is as follows:
Audit Finding Rating Definition

Pervasive weakness in the control environment and/or instances
Critical
of non-compliance with internal controls.
Significant weakness in the control environment and/or instances
Significant
of non-compliance with internal controls.
Less Isolated areas of weakness in the control environment and/or
significant instances of non-compliance with internal controls identified.
No material weakness in the control environment or material
Minor
instances of non-compliance with internal controls identified.
 A summary of our reporting classification framework is attached in the table below:
Weakness classification Definition
Control inadequacy (CIA) Laid down accounting and internal control

procedures were either inadequate or non-
existent. This may indicate a residual risk
exposure.
Noncompliance to (NCT) Employees were not following/ (complying to)

procedures/ (standards)/ (an act). This may
indicate lack of proper governance and
employee diligence.
Control ineffectiveness (CIE) Employees were performing their duties

ineffectively. This may indicate a lack of
performance in order to achieve objectives.
Housekeeping (HK) These do not necessarily require immediate

attention but should have an agreed program
for action.
10. CONCLUSION
Based on the findings in par. 9 and on the Follow-up audit performed on the Internal Cost
Recoveries Review Internal Audit Report as noted in the “Scope” paragraph above, we are of an
opinion that audit findings previously identified, corrective actions have not been implemented by
their respective due dates, and the current control environment has since not been improved at The
AAAAASOC Limited. However, care should be taken by management and corrective action of those
areas where internal control deficiencies have been identified and highlighted in this report again, in
order to prevent deterioration of the relevant internal controls and enforce adherence to Policy and
Procedures, PFMA and Treasury Regulations, Laws and Regulations and best practices.

AUGUST 2020
SECTION B
DETAILED AUDIT FINDINGS
SIGNIFICANT FINDINGS
AUGUST 2020
1. FINANCIAL FRAMEWORK FOR INTERGROUP TRANSACTIONS NOT

SIGNED
CRITERIA
Public Finance Management Act, Section 51(a) (i):
An accounting authority for a public entity must ensure that the public entity has and maintains effective,
efficient and transparent systems of financial and risk management and internal control.
FINDING
During the review of the Internal Cost Recoveries, it was noted that the Financial Framework for
Intergroup Transactions between AAAAA and Subsidiaries was not signed as evidence of approval.
CAUSE
Management oversight.
EFFECT
 Lack of adequately documented and approved controls may result in inconsistencies in processes
and weaknesses within the control environment.
 Non-compliance with the Public Finance Management Act.
CLASSIFICATION
Control ineffectiveness
RECOMMENDATION
Management must ensure that:
 The Financial Framework for Intergroup Transactions between AAAAA and Subsidiaries is
appropriately approved and clearly communicated to all relevant stakeholders to ensure that proper
processes are followed and adhered to.
 Compliance with the Financial Framework for Intergroup Transactions between AAAAA and
Subsidiaries is enforced and any non-compliance should be dealt with accordingly.
MANAGEMENT COMMENT
On completion of the report I (Acting Manager: Financial Compliance and Reporting) signed it and
submitted to the GCFO’s office.
Documents submitted to EXCO are done electronically and is the responsibility of the Group Executives
to ensure they are signed by the Divisions/ GCEO.
ACTION PLAN
The document has been submitted to the office of the Group Chief Financial Officer for further signing
and approval.
RESPONSIBLE PERSON

AUGUST 2020
IMPLEMENTATION DATE
21 August 2020
AUDITOR'S RESPONSE
Management comment is noted. The audit finding will be followed up during the audit of the 2020 / 2021
financial year to ensure that management has implemented corrective actions by the respective due
date, and that the control environment has since improved.
2. CUSTOMERS NOT BILLED AS PER THE SIGNED AGREEMENT

AUGUST 2020
CRITERIA
Lease Agreement between AAAAA and Tenants, Section 23.2:
The lessor shall, on a monthly basis, invoice the lessee for actual electricity and other utility consumption
and all the amounts thus owing to the lessor, shall be payable on the first working day of each month.
Should it in instance not be possible or in the opinion of the lessor not be practicable to determine the
electricity and utility consumption accurately, such charge will be mutually agreed between the parties,
falling amicable agreement, a meter shall be installed by the lessor and the cost thereof shall be
recovered from the lessee. Any such amounts owing to the lessor are also payable on the first working
day of each month.
FINDING
During our audit review of Internal Recoveries, it was noted that the actual cost of electricity were not
invoiced and recovered from the following tenant as prescribed by the Lease Agreement entered into by
the AAAAA and its tenants:
No. Client Building Contract Start Date

1. P-1200B 01 October 2017
CAUSE
Inadequate monitoring control.
EFFECT
 Failure to invoice customer as per the Lease Agreement will result in financial Loss to AAAAA.
 Non-compliance with the Lease agreement.
CLASSIFICATION
RECOMMENDATION
 Tenants are invoiced the actual cost of electricity and other utilities on a monthly basis as prescribed
by the signed Lease Agreement.
 The total expenditure incurred on electricity is recovered from the tenant, where it is impractical to
determine the actual amount the two parties should agree on the amount to be recovered.
 Lease Agreement is updated to suit the size and space leased by tenants.
 Compliance with the Lease Agreement is enforced and any non-compliance should be dealt with
accordingly
MANAGEMENT COMMENT
The audit finding is noted, however it should be noted that Finance can invoice once the relevant
information is received from Line Management.
ACTION PLAN

AUGUST 2020
REAM to send spreadsheets of the charges to external tenants, in accordance with the Lease
Agreement, Transport and Postal & Courier on a monthly basis.
The relevant Financial Officer to follow-up with Line Management regarding the outstanding information.
RESPONSIBLE PERSON
IMPLEMENTATION DATE
Immediately
AUDITOR'S RESPONSE
3. CLIENT INCORRECTLY INVOICED
CRITERIA
Treasury Regulation, Section 7.2.1:

AUGUST 2020
The accounting officer of an institution must manage revenue efficiently and effectively by developing
and implementing appropriate processes that provide for the identification, collection, safeguarding,
recording and reconciliation of information about revenue.
FINDING
During our audit review of rental charges to the subsidiaries, it was noted that the tariffs used to invoice
the following subsidiaries were incorrect resulting in under recovery from the subsidiaries:
ZZZZZ SOC Ltd
Amount Invoiced Correct Amount Variance

No. Building Name
R R R
1. 103 545.66 102 378.44 1 167.22
2. 149 118.70 148 852.65 266.05
3. 12 925.31 12 942.62 -17.31
4. 164 191.34 164 244.80 -53.46
5. 32 453.73 32 546.96 -93.23
6. 116 487.19 116 623.01 -135.82
7. 1 073.03 1 073.92 -0.89
8. 480.04 480.52 -0.48
9. 142 228.01 142 413.04 -185.03
10. 846.88 847.00 -0.12
11. 36 977.72 37 026.00 -48.28
12. 1 207.15 1 208.16 -1.01
13. 19 774.18 19 800.00 -25.82
14. 32 178.90 32 204.86 -25.96
15. 12 817.87 13 458.18 -640.31
16. 11 046.33 11 058.08 -11.75
17. 27 394.96 27 424.11 -29.15
18. 1 063.90 1 065.03 -1.13
19. 35 151.01 35 188.40 -37.39
20. 2 848.49 2 851.52 -3.03
21. 15 302.60 15 318.88 -16.28
22. 85.67 85.76 -0.09
23. 219.53 219.76 -0.23
24. 12 027.77 12 040.57 -12.80
25. 184.05 184.25 -0.20
26. 3 128.92 3 132.25 -3.33
27. 96.38 96.48 -0.10
28. 1 673.22 1 675.00 -1.78
29. 2 806.33 2 809.31 -2.98
30. 2 867.23 2 870.28 -3.05
ZZZZZSOC Ltd
Amount Invoiced Correct Amount Variance

No. Building Name
R R R

AUGUST 2020
1. 120 672.94 120 528.72 144.22

2. 29 041.40 29 104.46 -63.06
3. 62 276.78 62 347.61 -70.83
4. 29 765.22 29 867.28 -102.06
5. 7 293.15 7 299.30 -6.15
6. 62 010.78 62 076.37 -65.59
7. 40 994.50 41 028.71 -34.21
8. 13 329.15 13 338.65 -9.50
9. 88 702.68 89 035.35 -332.67
CAUSE
Lack of proper review.
EFFECT
 Under-recoveries of goods and/ or services will result in financial loss to AAAAA due to incorrect
invoicing.
 Financial statements may be misstated, i.e. Rental Income will be under / over stated.
 Non-compliance with Treasury Regulations.
CLASSIFICATION
Control ineffectiveness.
RECOMMENDATION
Management must ensure:
 The request for invoice is thoroughly reviewed by a senior responsible official against the Price
Transfer for Services anddocument so as to ensure that prices that are charged to customers are as
per the approved price list/agreement for accuracy.
 Compliance with the Treasury Regulations is enforced and any non-compliance be dealt with
accordingly.
MANAGEMENT COMMENT
Management agrees with the finding.
ACTION PLAN
The Rental Spreadsheet will be reviewed and updated with the correct rates to ensure the client is
correctly invoiced.
Finance will go through all the invoices and verify that the correct information is used for invoicing as
under-invoicing can result in loss of income for AAAAA.
RESPONSIBLE PERSON
IMPLEMENTATION DATE
Immediately
AUDITOR'S RESPONSE

AUGUST 2020
4. INTERNAL COST RECOVERIES NOT FULLY RECOVERED
CRITERIA
Procedure for Financial Framework for Intergroup Transactions between AAAAA and
Subsidiaries, paragraph 4.2.4:
The following charges will be recovered based on the actual cost to AAAAA plus handling charge. These
include, but not limited to:
 Compressed air;
 Courier services;
 Demin water meter levy;
 Electricity;
 Fuel;
 Gas;
 Hire of gas cylinder;
 Credit inform services;
 Liquid nitrogen meter;
 Pool vehicle;
 Rand water meter levy;
 Refuse removal;
 Rental vehicle;
 Telephone charges; and
 Training courses.
FINDING
During the review of the Internal Cost Recoveries, the following weaknesses were identified:
 The Financial Framework for Intergroup Transactions between AAAAA and indicate that service
charges will be recovered based on the actual cost to AAAAA plus a handling charge, however the
costs and/or calculation for the handling charges are not outlined in the respective Framework nor in
the Transfer Prices for Services and Products ZZZZZ].
 Furthermore, it was noted that the invoices generated for service rendered to the Subsidiaries are
not inclusive of the handling charges as prescribed by the Financial Framework for Intergroup
Transactions between AAAAA and Subsidiaries and thus result in AAAAA under recovering from the
respective subsidiaries.
The following serves as examples:
ZZZZZ SOC Ltd
Amount
No. Invoice Number Invoice Date Nature of Expense
R
1. 2020-05-29 Fuel 5 480.01
2. 2020-04-30 Fuel 1 006.91
3. 2020-07-21 Fuel 5 204.03
4. 2020-05-16 Electricity 759 154.97
5. 2020-05-28 Electricity 926 289.40
6. 2020-06-30 Electricity 1 214 244.75
AUGUST 2020
ZZZZZSOC Ltd
Amount
No. Invoice Number Invoice Date Nature of Expense
R
1. 2020-05-29 Fuel 21 133.11
2. 2020-04-30 Fuel 27 587.87
3. 2020-06-30 Fuel 29 899.63
4. 2020-05-19 Electricity 599 576.33
5. 2020-06-30 Electricity & Water 963 767.83
6. 2020-05-29 Electricity & Water 645 625.49
CAUSE
Lack of proper communication to all relevant stakeholders.
EFFECT
 Non-compliance with the Financial Framework for Intergroup Transactions between AAAAA and
Subsidiaries will result in financial loss.
CLASSIFICATION
RECOMMENDATION
 Service charges are recovered based on the actual cost to AAAAA plus a handling charge and/or the
Framework is revised to indicate the current practice.
 The Financial Framework for Intergroup Transactions between AAAAA and Subsidiaries is
appropriately approved and clearly communicated to all relevant stakeholders to ensure that proper
processes are followed and adhered to.
 Compliance with the Financial Framework for Intergroup Transactions between AAAAA and
Subsidiaries is enforced and any non-compliance should be dealt with accordingly.
MANAGEMENT COMMENT
The finding is noted.
ACTION PLAN
Finance will engage with Subsidiaries and Line Management to establish and agree on how the matter
can be handled going forward.
RESPONSIBLE PERSON
IMPLEMENTATION DATE
Immediately

AUGUST 2020
AUDITOR'S RESPONSE


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DOCUMENT TITLE Follow up of Internal Cost Recoveries Review Internal Audit Report

DATE 11 August 2020

NAME SIGNED DATE

Prepared 11 August 2020

Reviewed/ Approved 21 August 2020

SYSTEMS AND COMPLIANCE AUDIT

AUDITABLE ENTITY: AAAAA SOC LTD

FUNCTIONALITY: INTERNAL AUDIT

REFERENCE: PDO-SYSAUD-RISK REGISTER-0001

PROJECT NAME: FOLLOW UP OF INTERNAL COST

This report contains 23 pages

AAAAASOC Limited Page 2 of 23

SECTION B – DETAILED AUDIT FINDINGS

AAAAASOC Limited Page 3 of 23

FOLLOW UP OF INTERNAL COST RECOVERIES REVIEW INTERNAL AUDIT REPORT: AAAAASOC

CTING HEAD OF INTERNAL AUDIT

AAAAASOC Limited Page 4 of 23

AAAAASOC Limited Page 5 of 23

Furthermore, our assessment also included the following:

The objectives of our internal audit review are:

AAAAASOC Limited Page 6 of 23

Assumed Number of Items to Test

Monthly 12 2 to 5

Multiple times per

6. FRAUD AND INTERNAL CONTROL

AAAAASOC Limited Page 7 of 23

Management is responsible for the establishment and maintenance of an effective system of

 Establish and communicate organisational goals and values.

Management is responsible for risk management.

Management is responsible for the process to:

 Identify, assess, manage and control potential events.

8. RESPONSIBILITY FOR CORRECTIVE ACTION

It is the responsibility of management to ensure that corrective actions documented are

AAAAASOC Limited Page 8 of 23

Audit Action Plan and Issue

1. Financial Framework for The document has been 13 - -

The relevant Financial

AAAAASOC Limited Page 9 of 23

Audit Action Plan and Issue

Finance will go through all

AAAAASOC Limited Page 10 of 23

 A summary of our ratings is attached in the table below:

Audit Finding Rating Definition

 A summary of our reporting classification framework is attached in the table below:

Weakness classification Definition

Control inadequacy (CIA) Laid down accounting and internal control

Noncompliance to (NCT) Employees were not following/ (complying to)

Control ineffectiveness (CIE) Employees were performing their duties

Housekeeping (HK) These do not necessarily require immediate

AAAAASOC Limited Page 11 of 23

DETAILED AUDIT FINDINGS

1. FINANCIAL FRAMEWORK FOR INTERGROUP TRANSACTIONS NOT

Public Finance Management Act, Section 51(a) (i):

Management must ensure that:

AAAAASOC Limited Page 13 of 23

2. CUSTOMERS NOT BILLED AS PER THE SIGNED AGREEMENT

AAAAASOC Limited Page 14 of 23

Lease Agreement between AAAAA and Tenants, Section 23.2:

No. Client Building Contract Start Date

Inadequate monitoring control.

Management must ensure that:

AAAAASOC Limited Page 15 of 23

3. CLIENT INCORRECTLY INVOICED