AUE2602/101/3/2021
Tutorial Letter 101/3/2021
Corporate Governance in Accountancy
AUE2602
Semesters 1 and 2
Department of Auditing
This tutorial letter contains important information
about your module.
BARCODE
CONTENTS
Page
1
INTRODUCTION .......................................................................................................................... 3
Getting started … ..................................................................................................................................... 3
2
PURPOSE AND OUTCOMES ...................................................................................................... 4
2.1
Purpose ........................................................................................................................................ 4
2.2
Outcomes ..................................................................................................................................... 4
3
CONTACT DETAILS .................................................................................................................... 5
3.1
Lecturers....................................................................................................................................... 5
3.2
Department ................................................................................................................................... 5
3.3
University ...................................................................................................................................... 6
4
RESOURCES ............................................................................................................................... 7
4.1
Prescribed books .......................................................................................................................... 7
4.2
Recommended book(s) ................................................................................................................. 8
4.3
Electronic reserves (e-reserves) ................................................................................................... 8
4.4
Library services and resources ..................................................................................................... 8
5
STUDENT SUPPORT SERVICES ................................................................................................ 9
6
STUDY PLAN ............................................................................................................................... 9
7
PRACTICAL WORK ..................................................................................................................... 9
8
ASSESSMENT ............................................................................................................................. 9
8.1
Assessment criteria....................................................................................................................... 9
8.2
Assessment plan .......................................................................................................................... 9
8.3
Assignment numbers .................................................................................................................. 11
8.3.1
General assignment numbers ..................................................................................................... 11
8.3.2
Unique assignment numbers ...................................................................................................... 12
8.4
Assignment due dates ................................................................................................................ 12
8.5
Submission of assignments ........................................................................................................ 12
8.6
The assignments ........................................................................................................................ 13
8.7
Other assessment methods ........................................................................................................ 26
8.8
The examination ......................................................................................................................... 31
9
FREQUENTLY ASKED QUESTIONS ........................................................................................ 32
10
IN CLOSING ............................................................................................................................... 32
2
AUE2602/101/3/2021
Dear Student
Please note that Unisa has implemented a transformation charter based on five pillars and eight
dimensions. In response to this charter, we also place curriculum transformation high on the
agenda. For your information, curriculum transformation includes the following pillars: studentcentred scholarship, the pedagogical renewal of teaching and assessment practices, the
scholarship of teaching and learning, and the infusion of African epistemologies and philosophies.
These pillars and their principles are integrated at both the programme and module levels, as a
phased-in approach. You will notice the implementation thereof in your modules, and we
encourage you to fully embrace these changes during your studies at Unisa.
1
INTRODUCTION
It gives us great pleasure to welcome you as an AUE2602 student in the Department of Auditing.
As your lecturers, we are at your disposal and will gladly assist you in your studies. Be assured
of our willingness to support you with advice during your studies.
Because this is a blended module, you have to use myUnisa (the university’s online campus) to
study and complete the learning activities for this module. Visit the module site (AUE2602-21-S1
for Semester 1 and AUE2602-21-2 for Semester 2) on myUnisa frequently.
Getting started …
Owing to the nature of this module, you can read about the module and find your study material
online. Go to the website at https://my.unisa.ac.za and log in using your student number and
password. You will see AUE2602-21-S1/S2 in the row of modules displayed in the orange blocks
at the top of the webpage. Select the More tab if you cannot find the module that you require in
the blocks displayed. Then click on the module you want to open.
You will receive this tutorial letter and a printed copy of some of the online study material for the
module. While the printed material may appear different from the online study material, they
contain the same information.
Study material
The despatch department will supply you with the following study material for this module:
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study guide (also available online through the study units on myUnisa)
tutorial letters (Note that based on a Unisa decision, some tutorial letters of less than 20
pages are only available online on myUnisa under Additional Resources.
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Please note: The study guide and tutorial letters of this module are VERY IMPORTANT and
you cannot expect to pass this module if you do not work through each of them.
To contact the despatch department about study material that you have not received, use the
contact details in the brochure Study @ Unisa (which you should have received with your study
material).
You may access the tutorial letters for the modules for which you are registered on myUnisa at
http://my.unisa.ac.za. You can also use myUnisa to confirm that you have received all the tutorial
letters. Students must be registered for a myLife e-mail address and must be able to access
myUnisa to be able to access their study material, important announcements, submit
3
assignments, gain access to the library functions and various learning resources, download study
material, “chat” to their lecturers and fellow students about their studies and the challenges they
have, and participate on online discussion forums.
myUnisa and myLife email address
In addition to registering on myUnisa, it is crucial that you activate your myLife e-mail address, as
all official correspondence about this module will be sent to your myLife address and not to your
private e-mail address. Please see Study @ Unisa for more information on the activation of your
myLife e-mail address as well as obtaining access to the module site on myUnisa.
Please note: See Study @ Unisa for details on how to forward your myLife e-mail to another
e-mail address of your choice.
Go to the website https://my.unisa.ac.za and log in with your student number and password. You
will see AUE2602 in your row of modules in the orange bar across the top of the webpage.
2
PURPOSE AND OUTCOMES
2.1
Purpose
The purpose of this module is to provide students with sound knowledge and skills in the principles
of corporate governance and statutory matters, and internal controls in the business cycles.
Students who are credited with this module are equipped with solid theoretical knowledge on
corporate governance and statutory matters, and in identifying and evaluating the efficiency of
internal controls in different business cycles to report to the management of an ordinary company
trading in goods and services.
You are responsible to pace yourself when studying this module. The volume of work is enormous
and you should bear this in mind when planning your studies. Spread your studies evenly
throughout the semester.
Also use Study @ Unisa for general time management and planning.
You will receive a proposed timetable on myUnisa, accompanied with announcements.
2.2
Outcomes
The outcomes of this module are indicated at the beginning of each study unit in your study guide.
During the semester you should do the following
:
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Work through your study material, make summaries and complete the activities.

Read the announcements on myUnisa.

Answer the questions in Tutorial Letter 102 and compare your answers with the suggested
solutions in Tutorial Letter 102.

Complete and submit Assignments 01 and 02 before their respective due date. Submitting
these assignments will give you admission to the examination. Assignment 01 is available
on myUnisa under Online Assessments. Only Assignment 02 is included in this tutorial
letter.
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AUE2602/101/3/2021

Prepare for the examination (for examination preparation and techniques, see Study @
Unisa).
All the students who are registered for this module will receive access to the solutions of the
assignments, even if they do not submit their assignments.
3
CONTACT DETAILS
3.1
Lecturers
The lecturers for this module, and to whom you should direct your enquiries, is:
Ms G Richard
E-mail:
AUE2602@unisa.ac.za
Tel: +27 12 429 6480
Ms F Moti
E-mail:
AUE2602@unisa.ac.za
Tel: +27 12 429 4561
Course co-ordinator:
Prof HJ Theron
E-mail:
therohj@unisa.ac.za
Tel: +27 12 429 4364
Please note: Personal appointments should be arranged beforehand. Come prepared and
ensure that you have worked through your study guide when visiting us.
Always have your student number and module code at hand when you contact the
university!!!
3.2
Department
If you wish to write to us, letters should be addressed to:
The Module Leader: AUE2602
Department of Auditing
PO Box 392
UNISA
0003
Secretary:
Tel:
+27 12 429 4707
Departmental webpage:
http://www.unisa.ac.za/sites/corporate/default/Colleges/Accounting-Sciences/Schools,departments-&-centre/School-of-Accountancy/Department-of-Auditing
College related undergraduate enquiries should be directed to:
CASenquiries-undergraduate@unisa.ac.za
+2712 429 2233/2982 or
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3.3
University
If you need to contact the university about matters that are not related to the content of this
module, please see Study @ Unisa.. In this brochure, you will find the contact details of various
administrative departments. If you did not receive this document and have access to the internet,
you can find it on myUnisa under Resources. Remember to always have your student number
at hand when making an enquiry.
Please ensure that you contact the correct section or department for each enquiry, as this
will result in the speedy resolution of the enquiry.
The contact details are:
E-mail addresses:
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info@unisa.ac.za for general enquiries
study-info@unisa.ac.za for application and registration related enquiries (prospective and
registered students)
international@unisa.ac.za for international students (registration-related enquiries)
assign@unisa.ac.za for assignment enquiries
exams@unisa.ac.za for examination enquiries
despatch@unisa.ac.za for study material enquiries
finan@unisa.ac.za for student account enquiries
gaudeamus@unisa.ac.za for graduation enquiries
myUnisaHelp@unisa.ac.za for assistance with myUnisa
myLifeHelp@unisa.ac.za for assistance with myLife email accounts
aegrotats@unisa.ac.za for aegrotat examinations
remark@unisa.ac.za for remarking of examination papers
recheck@unisa.ac.za for rechecking of examination papers
condiscipuli@unisa.ac.za for fellow student names
counselling@unisa.ac.za for student counselling and career development
vospresc@unisa.ac.za for enquiries about prescribed books
purhasescript@unisa.ac.za for purchasing of examination papers
Library
Study @ Unisa contains a list of all the services offered by the Unisa Library.
General library catalogue enquiries
Library web co-coordinator
Inter-library loans enquiries
Enquiries about subject databases
Library information desk
Enquiries about training presented
by the library
Send a question to the library staff
bib-oasis@unisa.ac.za
bib-web@unisa.ac.za
libr-ill@unisa.ac.za
bib-dbase@unisa.ac.za
bib-help@unisa.ac.za
bib-oplei@unisa.ac.za
bibrefq@unisa.ac.za
SMS:
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AUE2602/101/3/2021
Send an SMS to 32695 for more information on how to contact Unisa via SMS (only for students
within the borders of South Africa). Students will receive an auto response SMS with the various
SMS options. Standard SMS rates apply.
Students can also SMS enquiries directly to:
43578 for Applications and registrations*
43584 for Assignments*
43584 for Examinations*
43579 for Study material*
31954 for Student accounts*
43582 for myUnisa and myLife*
* The SMS number is only for students residing in South Africa. International students are urged
to make use of the e-mail address info@unisa.ac.za.
Fax number:
Fax enquiries to +27 (0)12 429 4150
Online address
http://my.unisa.ac.za
Unisa website
http://www.unisa.ac.za
Other means of contacting the university are:
Physical address
University of South Africa
Preller Street
Muckleneuk
Pretoria
City of Tshwane
Postal address
University of South Africa
PO Box 392
UNISA
0003
Please note: Lecturers cannot assist you with registration, payments, module codes,
examinations and so on. These are administrative issues which should be discussed with
the relevant sections/departments.
4
RESOURCES
4.1
Prescribed books
The following is a list of the prescribed books for this module:
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
Adams, A, Diale, T & Richard, G. 2019. Auditing notes for South African students. 11th
edition (or latest). Durban: LexisNexis.
The College of Accounting Sciences’ (CAS) Teaching and Learning Committee approved this
book as a prescribed book. Two of the authors, Mr Diale and Ms Richard, are employees of
Unisa in the Department of Auditing. The Teaching and Learning Committee considered the
ethical implications of prescribing the book and approved it as informed by the Unisa Code of
Ethics and Conduct.
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LexisNexis. 2016. Auditing: Legislation and standards. 2nd edition. Durban: LexisNexis.
OER links:
Information contained Auditing: Legislation and standards is available on the following links:
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https://www.saica.co.za/Portals/0/Technical/LegalAndGovernance/Act%2071%202008%2
0Companies%20Act.pdf
https://cdn.ymaws.com/www.iodsa.co.za/resource/collection/684B68A7-B768-465C-8214E3A007F15A5A/IoDSA_King_IV_Report_-_WebVersion.pdf
Please see the list of official booksellers and their addresses in Study @ Unisa brochure.
Prescribed books are available at the university’s official booksellers. If you find it difficult to obtain
the books from these bookshops, please contact the Prescribed Books Section as soon as
possible at telephone number +27 12 429 4152 or e-mail address vospresc@unisa.ac.za
INFORMATION ON THE USE OF AND THE SOURCES OF INFORMATION AVAILABLE IN
THE UNISA LIBRARY ARE DETAILED IN STUDY @ UNISA.
4.2
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4.3
Recommended book(s)
The following website is
http://insighteducation.co.za/
source
of
recommended
books
for
this
module:
Electronic reserves (e-reserves)
E-reserves can be downloaded from the Library catalogue. More information is available at:
https://libguides.unisa.ac.za/request/request
4.4
Library services and resources
The Unisa library offers a range of information services and resources:
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For detailed library information, go to https://unisa.ac.za/library.
For research support and services (for example personal librarians and literature search
services), go to https://www.unisa.ac.za/sites/corporate/default/Library/Libraryservices/Research-support.
The library has created numerous library guides: https://libguides.unisa.ac.za
Recommended guides:
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Request and download recommended material: https://libguides.unisa.ac.za/request
Postgraduate information services: https://libguides.unisa.ac.za/request/postgrad
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AUE2602/101/3/2021
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Finding and using library resources and tools: https://libguides.unisa.ac.za/researchsupport
Frequently asked questions about the library: https://libguides.unisa.ac.za/ask
Services to students living with disabilities: https://libguides.unisa.ac.za/disability
Assistance with technical problems accessing the Unisa Library or resources:
https://libguides.unisa.ac.za/techsupport
You may also send an e-mail to Lib-help@unisa.ac.za (please provide your student number in
the subject line).
5
STUDENT SUPPORT SERVICES
Study @ Unisa is available on myUnisa: www.unisa.ac.za/brochures/studies. This brochure
contains all the tips and information you need to succeed at Unisa.
6
STUDY PLAN
A study plan to guide you in terms of the time you should spend on each study unit will be made
available on myUnisa at the beginning of the semester.
7
PRACTICAL WORK
There is no practical work for this module.
8
ASSESSMENT
8.1
Assessment criteria
The assessment criteria are indicated at the beginning of each study unit in the study guide. Make
sure you can achieve them before moving on to the next study unit.
8.2
Assessment plan
Assignments
Assignments are regarded as part of the study material for this module. As you do the
assignments, study the reading texts, consult other resources, discuss the work with fellow
students or tutors, or do research, you are actively engaged in learning.
You are required to submit the compulsory Assignment 01 or 02 before the due date to obtain
admission to the examination. in other words, examination admission will be obtained by
submitting compulsory Assignment 01 or 02 and not by the marks you obtain for it.
The marks you obtain for Assignment 01 and Assignment 02 will contribute towards your
semester mark.
It is in your own interest to retain a copy of proof that the compulsory assignments were
submitted so that you can produce this if afterwards there is a dispute on whether or not an
assignment was received.
Plagiarism
Plagiarism is the act of taking the words, ideas and thoughts of others and passing them off as
your own. It is a form of theft which involves a number of dishonest academic activities. The
Disciplinary Code for Students (latest version) is given to all students at registration. Students are
9
advised to study this code. Please also read the university's Policy on Copyright Infringement and
Plagiarism.
All your assignments must be your own work. You will receive 0% for your whole assignment if it
is deemed that plagiarism was committed in any part of the assignment and you may also be
subjected to disciplinary proceedings by the university.
Everyone must obtain the required skills to ensure that they will be able to make a valuable
contribution in the workplace.
When answering assignment or examination questions at undergraduate level, it is
accepted that you studied from the prescribed study material and prescribed book; it is
therefore not necessary and impractical that you provide references to the study material
or prescribed book. Reference to authors where information comes from mostly apply to
postgraduate studies, especially dissertations and theses.
What is prohibited in terms of the Unisa Academic Integrity Policy at undergraduate level is
cheating.
Cheating (as a violation of academic integrity) refers to obtaining or attempting to obtain, or aiding
another to obtain, credit for work or an improvement in any assessment by dishonest or deceptive
means. Examples of cheating are:
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Collaboration on any form of formative or summative assessment, without the permission of
the lecturer.
Completing an assessment or taking an examination on behalf of another student.
Possession, distribution, and/or use of unauthorised materials or technology before or during
an examination or when preparing formative assessments.
Contracting (ghost or contract cheating) another person or a professional agency to produce
academic work, sometimes original work, on his/her behalf and then submitting it as his/her
own academic output. It inter alia includes the practice of submitting a purchased research
paper or assessment as one’s own work and purchasing an examination paper which has
illegally been made available prior to the examination date.
Copying from another student for the purpose of completing any assessment.
It is therefore expected that the answers provided by students in assignments and the
examination are their own work and this can include information from the prescribed book without
referencing.
Plagiarism declaration:
By submitting any AUE2602 assignment, I declare that
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I have read the Unisa Students’ Disciplinary Code
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I know what plagiarism is, that plagiarism is wrong and that disciplinary steps can
be taken against me if I am found guilty of plagiarism
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This assignment, submitted by myself, is my own work and I have referenced all
the sources that I have used
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I have not allowed any other student to copy my work
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I know that if I am found to be in violation of this declaration I will receive 0% for
the assignment involved
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AUE2602/101/3/2021
Please note: You do not have to submit the declaration. By submitting any AUE2602
assignment, you automatically declare that you adhere to all the above with regard to the
specific assignment.
Comment and feedback on assignments
The solution to Assignment 01 will be provided as feedback on myUnisa which will only be
available on myUnisa after the due date of the assignment. The solution to Assignment 02 will be
provided in Tutorial Letter 201 which will only be available after the due date of this assignment.
As soon as you have received the comment, please check your answers. The assignments and
the comment on them are an important part of your learning and should help you to be better
prepared for the next assignment and the examination.
Semester mark
The marks that you obtain for Assignment 01 and Assignment 02 will contribute towards your
semester mark for the module.
Your semester mark will contribute 20% towards your final mark. Students require a final mark of
50% to pass a module. The final mark is calculated as follows:
5% × mark obtained for compulsory Assignment 01
plus
15% × mark obtained for compulsory Assignment 02
plus
80% × mark obtained in the examination (subminimum of 40%
The sub-minimum of 40% implies that if you obtain a mark of less than 40% in the examination,
your semester mark will not be taken into account.
Please ensure that your Assignment 01 and Assignment 02 reach the university before the due
date of each assignment – late submission of these assignments will result in you not
receiving marks that will count towards your semester mark.
THEREFORE:
TO GET ADMISSION TO THE EXAMINATION, YOU MUST SUBMIT ASSIGNMENT 01 OR
ASSIGNMENT 02 BEFORE OR ON THE DUE DATE
YOUR MARKS FOR BOTH ASSIGNMENTS 01 AND 02 WILL BE USED TO DETERMINE
YOUR SEMESTER MARK
8.3
Assignment numbers
8.3.1 General assignment numbers
Assignments are numbered consecutively per module, starting from 01. Only Arabic numerals
are used, for example: Assignments 01, 02, 03, and so on.
11
8.3.2 Unique assignment numbers
In addition to the general assignment number (eg 01), each assignment has its own unique
assignment number (eg 102717). This number must be written on the mark reading sheet or
assignment cover page in the designated area.
8.4
Assignment due dates
ASSIGNMENT
FIRST SEMESTER
Due date
registered
semester
01
02
8.5
if you
for the
SECOND SEMESTER
are Due date if
1st registered for
semester
you
the
15 March 2021
30 August 2021
Unique number:799477
Unique number: 812782
19 April 2021
27 September 2021
Unique number:623004
Unique number:891958
are
2nd
Submission of assignments
Assignment 01 must be done online on myUnisa under Online Assessments. You may submit
written assignments either by post or electronically on myUnisa. Assignments may not be
submitted by fax or e-mail. For detailed information on and the requirements for assignments, see
Study @ Unisa.
Please note: Assignment 02 can only be submitted in PDF on myUnisa. The PDF file should
NOT be submitted as “Read only” or “Protected”.
To submit an assignment on myUnisa:
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Go to myUnisa.
Log in with your student number and password.
Select the module from the orange bar.
Click on Assignments in the left-hand menu.
Click on the number of the assignment that you want to submit.
Follow the instructions on the screen.
Please ensure that your Assignment 01 or Assignment 02 reaches the university before the due
date – late submission of Assignment 01 or Assignment 02 will result in you not being
admitted to the examination.
Please note: You must submit Assignment 01 or Assignment 02 in order to be admitted to
the examination. Both these assignments (01 and 02) must be submitted for the purposes
of determining your semester mark. No extension of the assignment due dates can be
given by the lecturers.
General remarks
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AUE2602/101/3/2021
For enquiries about assignments (for example whether the university has received your
assignment or the date on which an assignment was returned to you), please see the contact
information in Section 3 of this tutorial letter. You may also find this information on myUnisa. To
go to the myUnisa website, start at the main Unisa website (http://www.unisa.ac.za) and then click
on the login to myUnisa link under the myUnisa heading on the screen. This should take you to
the myUnisa website. You can also go there directly by typing in http://my.unisa.ac.za.
8.6
The assignments
8.6.1 Semester 1: Compulsory Assignment 01
Instructions:
This assignment will take place on the Online Assessment tool located in the AUE2602
module site under myModules on myUnisa. No separate Assignment 01 will be available.
The Online Assessment tool will present the questions to you. It is a multiple-choice question
assessment. The assignment consists of 20 multiple-choice questions. The unique assignment
number is 799477.
Claim your myUnisa password before the start of the semester if you have not done so
already.
Follow the following instructions on the AUE2602 module site:
1. On the top right corner of the page, click on the Sites button. A pop-up window will appear.
Choose the name of the module site for the first semester: AUE2602–21–S1.
2. On the left navigation (menu section), click Online Assessment.
3. On the Online Assessment page, click the assignment link under the section Take an
Assessment. This will take you to the instructions page and allow you to start the assignment.
Click Begin Assessment to start.
4. It will be a timed assessment of 60 minutes.
5. Read the questions on the page and select your answer from the options provided or add text
when requested.
6. You will have three times to attempt the assignment BEFORE the DUE DATE (15 March
2021). Your highest score will be used in calculating your semester mark.
7. You will receive feedback on myUnisa after the due date.
The assignment covers Topics 1 and 2 in the study guide.
8.6.2 Semester 1: Compulsory Assignment 02
Instructions:
(1)
See Study @ Unisa for instructions on how to submit written or typed assignments.
Special instructions on answering this assignment
(1)
(2)
(3)
This assignment covers Topics 3 to 8 in the study guide.
All the questions must be completed.
Only selected questions will be marked.
Plagiarism:

Please refer to Unisa’s policy on plagiarism. You are reminded that your assignment must
be your own work.
13

By submitting your assignment, you confirm that you accept and will adhere to the terms of
the plagiarism declaration. Please note:
o If you are found to be in violation of the declaration, you will receive 0% for
Assignment 02.
o If you copied all or a portion of your assignment from someone else (including tutors
and an online study group), both you and the person(s) you copied from will receive 0%.
If any similar-looking/worded assignments are found, they will be considered to be a
violation of the declaration.
When answering assignment or examination questions at undergraduate level, it is
accepted that you studied from the prescribed study material and prescribed book; it is
therefore not necessary and impractical that you provide references to the study material
or prescribed book. Reference to authors where information comes from mostly apply to
postgraduate studies, especially dissertations and theses.
What is prohibited in terms of the Unisa Academic Integrity Policy at undergraduate level is
cheating.
Cheating (as a violation of academic integrity) refers to obtaining or attempting to obtain, or aiding
another to obtain, credit for work or an improvement in any assessment by dishonest or deceptive
means. Examples of cheating are:

Collaboration on any form of formative or summative assessment, without the permission of
the lecturer.
Completing an assessment or taking an examination on behalf of another student.
Possession, distribution, and/or use of unauthorised materials or technology before or during
an examination or when preparing formative assessments.
Contracting (ghost or contract cheating) another person or a professional agency to produce
academic work, sometimes original work, on his/her behalf and then submitting it as his/her
own academic output. It inter alia includes the practice of submitting a purchased research
paper or assessment as one’s own work and purchasing an examination paper which has
illegally been made available prior to the examination date.
Copying from another student for the purpose of completing any assessment.




It is therefore expected that the answers provided by students in assignments and the
examination are their own work and this can include information from the prescribed book without
referencing.
Plagiarism declaration
By submitting AUE2602 Assignment 02, I declare that

I have read the Unisa Students’ Disciplinary Code

I know what plagiarism is, that plagiarism is wrong and that disciplinary steps can be
taken against me if I am found guilty of plagiarism

This assignment, submitted by myself, is my own work and I have referenced all the
sources that I have used

I have not allowed any other student to copy my work

I know that if I am found to be in violation of this declaration I will receive 0% for the
assignment involved
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AUE2602/101/3/2021
Please note: You do not have to submit the declaration. By submitting any AUE2602
assignment, you automatically declare that you adhere to all the above with regard to the
specific assignment.
ASSIGNMENT 02: ESSAY TYPE QUESTIONS
UNIQUE ASSIGNMENT NUMBER FOR THE FIRST SEMESTER:
623004
DATE OF SUBMISSION FOR THE FIRST SEMESTER
19 April 2021
QUESTION 1
88 MARKS
Corporate governance
Avengers Limited (Avengers) is a large distributor of consumer goods, general merchandise,
home improvement equipment; and a wholesaler of basic foods in South Africa. Avengers’
governance structure consists of the Board of Directors, assisted by four committees (namely the
Audit Committee, Remuneration Committee, Risk Governance Committee and Nominations
Committee). Avengers’ Board of Directors, as at 29 February 2021, consisted of the following
individuals:
Director
Notes
Position
Age
Mr Hulk
Mr Thor
Mr Black Panther
CA(SA)
Mr Hawk Eye
Mr Iron Man
Mr Captain America
Ms Black Widow
Mr Spiderman
1&2
2&3
2&7
Chairperson
Chief Executive Officer (CEO)
Chief Financial Officer (CFO) and
Company Secretary
Chief Operations Officer (COO)
Director Human Resources
Non-executive director
Non-executive director
Non-executive director
55
57
57
Years in
position
13
14
20
56
55
61
46
63
15
15
17
1
19
2&4
2
5&8
6&8
8
Notes
1. Mr Hulk owns 15% of the equity interest in Avengers and was appointed as the chairperson
of the board by all the members of the board at the meeting on 1 August 2007. Mr Hulk served
as the CEO of Avengers until 1 July 2007. He also served as the chairperson of the Audit
Committee of Avengers for a number of years.
2. Messrs Thor and Hulk have been friends since their school years. They form part of the socalled “Superhero Club” (a name they earned while at school); Messrs Black Panther, Hawk
Eye and Iron Man also belong to this club.
15
3. Mr Thor was appointed to the position of CEO of Avengers on 1 July 2007 by Mr Hulk and he
served as a member of the Audit Committee of Avengers for a number of years.
Mr Thor and Mr Hulk are the two members serving on the Audit Committee.
4. Mr Hawk Eye plays a significant role in the day-to-day management of Avengers as the COO.
5. Mr Captain America is the CEO of one of Avengers’s significant suppliers.
6. Ms Black Widow serves on the boards of ten other companies from various industry sectors;
and the Board of Avengers believes that it makes her a valuable asset to the group of
companies.
7. Mr Black Panther informed the board of a possible contract relating to the import of retail
stock. He was recently approached by an overseas company who indicated that there would
be huge savings in store for Avengers. They also mentioned that they would make it worth
his while if he assisted them in winning the contract. He had done some research on the
company and found out that they are also involved in litigation relating to pollution at their
manufacturing plants. He did not accept the contract.
8. Messrs Captain America, Black Widow and Spiderman are the three members serving on the
Nominations Committee. The chairperson of the Remuneration Committee, Ms Black Widow,
announced that she would resign as chairperson next month.
Revenue and receipts – internal control
You are a registered candidate auditor at an auditors firm. Your firm has been engaged to
evaluate Avengers’ internal control systems and you have been assigned to the revenue and
receipts cycle. Ben Dekker, the financial accountant of Avengers is of the opinion that the
application software is poorly designed and does not make satisfactory use of programmed
controls. He informs you that the company is experiencing a number of problems in the cycle
including the following: inaccurate and incomplete internal sales orders and picking slips being
created
Revenue and receipts – community project
As a corporate citizen, Avengers assisted a community bakery to register as a company, sell their
goods in the canteen and expand their business. The bakery, registered as Bakeacake (Pty) Ltd,
now manufactures a range of biscuits and small cakes that it sells to supermarkets, street vendors
and the Avengers canteen. The newly appointed manager of Bakeacake has asked your firm to
review the systems within the company that deal with cash. You have been provided with the
following information:
From Monday to Friday between 07h00 and 09h00, street vendors can purchase biscuits and
cakes from the “vendor shop” which is attached to the factory. The vendor shop is run solely by
Ted Baker, an employee in the factory administration department. Sales are made only for cash.
Cash received is placed in a large metal cashbox. If the vendor requests a receipt, a pre-printed
numerically sequenced two-part cash receipt is made out by Ted Baker. He closes the vendor
shop at 09h00, takes the cashbox with him and returns to his office in the factory. Before opening
the shop on Monday mornings, he leaves the cash from the previous week’s sales (in the locked
cashbox) on the desk of the senior bookkeeper Cookie Oates. Only Cookie Oates and Ted Baker
have keys to the cashbox that is used in the shop.
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Social media
Mr Thor expressed the view that the use of social media in Avengers is rapidly growing as it is
becoming more pervasive and impacting many parts of the business. He requested that your
auditing firm should explain the social media exposure risks and the good practices that can be
incorporated to prevent a social media crisis.
REQUIRED
MARKS
Regarding the “Corporate governance practices” section:
1.1
Evaluate the corporate governance practices of Avengers according to the
principles and practices of the King IV Code™. You should state the relevant
recommended practice and discuss issues relating to compliance and noncompliance with the King IV Report in your answer.
Limit your discussion to the information provided in the scenario.
Present your answer under the following headings:
a)
Governing body (Board of Directors): Composition of the board (seven
comments)
b)
Governing body: Chairperson of the board (three comments)
c)
Audit Committee: (five comments)
d)
Nominations Committee (one comment)
e)
Company secretary (one comment)
One presentation mark will be awarded if the answer is presented under the
correct headings
1.2
1.3
1.4
(10.5)
(4.5)
(7.5)
(1.5)
(1.5)
(1)
List four (4) duties of the Audit Committee concerning the auditor, according to
section 94 of the Companies Act of 2008
(4)
In terms of section 76 of the Companies Act 71 of 2008, on the standards of
directors’ conduct, critically evaluate the conduct of Mr Black Panther with regard
to the possible new contract for the import of materials.
(3)
Indicate in terms of the recommendations of the King IV Report, giving brief reasons,
which of the current board members will be suitable to be appointed as the new
chairperson of the Remuneration Committee.
(3)
Regarding the “Revenue and Receipts – internal control and community project” sections:
1.5
1.6
Describe the control procedures that should be put in place to ensure that
accurate and complete internal sales orders are generated for all the orders
received from customers.
(12)
Identify and explain the weaknesses in the systems of Bakeacake (Pty) Ltd that
deal with cash, based on the information given above. You are NOT required to
make recommendations. Structure your answer under the following headings:
(12)
Weakness 1:
17
Identify: What is the weakness…
Explain: Why is it a weakness…
1.7
Weakness 2:
…
Presentation marks will be awarded if the answer is presented under the correct
headings.
(1)
Describe in your own words what it means to be a responsible corporate citizen.
(6)
Regarding the “Social media” section:
1.8
1.9
List the possible metrics that Avengers can use to determine if a social media
event is a crisis.
(3)
In letter format, address Mr Thor’s questions;
1.9.1 List the key risks of social media exposure
1.9.2 List the controls that can be implemented to prevent a social media crisis.
(4)
(7)
Two presentation marks will be awarded if the answer is presented under the
correct headings and for communication, logical reasoning and structure.
(2)
QUESTION 2
25 MARKS
Mr Dliale achieved his lifelong dream when he opened his own restaurant, The Macaron. The
restaurant has been open for 12 months and has proved to be very popular. Unfortunately the
Covid-19 pandemic struck internationally and the pressure of the lockdown has weighed heavily
on the restaurant. Mr Dliale have been forced to quickly come up with new adaptations of menus,
points of service, delivery and takeout models that better serve local communities just to keep the
lights on. Mr Dliale and you attended university together. He contacted you with questions about
the computerisation of his operations.
Your initial enquiries have revealed the following:
 The restaurant employs two cashiers, five permanent waiting staff, a barman and
a second chef (to fill in on the nights when Mr Dliale is off duty).
 For take away food and drinks orders are recorded on pre-numbered order pads. Each waitress
has her own unique sequence pre-numbered order pads.
 On completion of their meal, customers are required to proceed to the cashier and quote their
order number. The cashier then rings up the cost of the meal using a copy of the waitress's
completed order form. The cash register is situated at the exit point.
Mr Dliale has identified the Ikentoo software package as the most appropriate for the restaurant’s
needs. He has indicated that he is planning to replace the current cash register with a computer
terminal linked to a cash drawer and to install a terminal in his office which will be used for
recording all other accounting activities.
2.1
2.2
Describe the controls that Mr Dliale should implement to restrict access to the
sales and computerised accounting applications.
List the disadvantages of packaged software
(10)
(2)
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AUE2602/101/3/2021
2.3
List the advantages of packaged software
2.4
Describe the programmed application controls that you would expect to find to
ensure that all valid restaurant sales are captured accurately and completely.
(3)
(10)
8.6.3 Semester 2: Compulsory Assignment 01
Instructions:
This assignment will take place on the Online Assessment tool located on the AUE2602
module site under myModules on myUnisa. No separate Assignment 01 will be available.
The Online Assessment tool will present the questions to you. It is a multiple-choice question
assessment. The assignment consists of 20 multiple-choice questions. The unique assignment
number is 812782.
Claim your myUnisa password before the start of the semester if you have not done so
already.
Follow the following instructions on the AUE2602 module site:
1. on the top right corner of the page, click on the Sites button. A pop-up window will appear.
Choose the name of the module site for the second semester: AUE2602–21–S2.
2. On the left navigation (menu section) click Online Assessment.
3. On the Online Assessment page, click the assignment link under the section Take an
Assessment. This will take you to the instructions page and allow you to start the assignment.
Click Begin Assessment to start.
4. It will be a timed assessment of 60 minutes.
5. Read the questions on the page and select your answer from the options provided or add text
when requested.
6. You will have three times to attempt the assignment BEFORE the DUE DATE (30 August
2021). Your highest score will be used in calculating your semester mark.
7. You will receive feedback on myUnisa after the due date.
The assignment covers Topics 1 and 2 in the study guide.
8.6.4 Semester 2: Compulsory Assignment 02
Instructions:
(1)
See Study@Unisa for instructions on how to submit written or typed assignments.
Special instructions for answering this assignment
(1)
(2)
(3)
This assignment covers Topics 3 to 8 in the study guide.
All the questions must be completed.
Only selected questions will be marked.
Plagiarism:


Please refer to Unisa’s policy on plagiarism. You are reminded that your assignment must be
your own work.
By submitting your assignment, you confirm that you accept and will adhere to the terms of
the plagiarism declaration. Please note:
19
o
o
If you are found to be in violation of the declaration, you will receive 0% for Assignment 02.
If you copied all or a portion of your assignment from someone else (including tutors
and an online study group), both you and the person(s) you copied from will receive 0%.
If any similar-looking/worded assignments are found, they will be considered a violation
of the declaration.
When answering assignment or examination questions at undergraduate level, it is
accepted that you studied from the prescribed study material and prescribed book; it is
therefore not necessary and impractical that you provide references to the study material
or prescribed book. Reference to authors where information comes from mostly apply to
postgraduate studies, especially dissertations and theses.
What is prohibited in terms of the Unisa Academic Integrity Policy at undergraduate level is
cheating.
Cheating (as a violation of academic integrity) refers to obtaining or attempting to obtain, or aiding
another to obtain, credit for work or an improvement in any assessment by dishonest or deceptive
means. Examples of cheating are:

Collaboration on any form of formative or summative assessment, without the permission of
the lecturer.
Completing an assessment or taking an examination on behalf of another student.
Possession, distribution, and/or use of unauthorised materials or technology before or during
an examination or when preparing formative assessments.
Contracting (ghost or contract cheating) another person or a professional agency to produce
academic work, sometimes original work, on his/her behalf and then submitting it as his/her
own academic output. It inter alia includes the practice of submitting a purchased research
paper or assessment as one’s own work and purchasing an examination paper which has
illegally been made available prior to the examination date.
Copying from another student for the purpose of completing any assessment.




It is therefore expected that the answers provided by students in assignments and the
examination are their own work and this can include information from the prescribed book without
referencing.
Plagiarism declaration
By submitting AUE2602 Assignment 02, I declare that





I have read the Unisa Students’ Disciplinary Code
I know what plagiarism is, that plagiarism is wrong and that disciplinary steps can be
taken against me if I am found guilty of plagiarism
This assignment, submitted by myself, is my own work and I have referenced all the
sources that I have used
I have not allowed any other student to copy my work
I know that if I am found to be in violation of this declaration I will receive 0% for the
assignment involved
Please note: You do not have to submit the declaration. By submitting any AUE2602
assignment, you automatically declare that you adhere to all the above with regard to the
specific assignment.
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AUE2602/101/3/2021
ASSIGNMENT 02: ESSAY TYPE QUESTIONS
UNIQUE ASSIGNMENT NUMBER FOR THE SECOND SEMESTER:
891958
DATE OF SUBMISSION FOR THE SECOND SEMESTER
27 September 2021
QUESTION 1
54 MARKS
Corporate governance
You are an audit senior at Young CAs, a registered audit firm in Johannesburg. Your audit client,
Faced Ltd (hereafter referred to as “Faced”), is a beauty and cosmetics company that intends to
list on the Johannesburg Stock Exchange. The financial director, Mr Williams, informs you that his
knowledge of the King IV Report is limited and he would like you to assist the company in
complying with sound corporate governance. You receive the following information about the
board and its committees.
#
Name
Board
Remuneration Committee
1.
Mr Nathan Sawyer
Non-executive director
Chairperson
Attorney
Chairperson
2.
Mr Paul Farold
Chief executive officer
3.
Mrs Faith Fortune
Non-executive director
Member
8% shareholding in Faced
4.
Ms Jane Siddiq
Non-executive director
Social media influencer who receives
products to evaluate
5.
Mr Harold Moore
Non-executive director
Member
Medical doctor
6.
Mrs Sandra
Gibbons
Non-executive director
7.
Mr Robin William
CA(SA)
Finance director
8.
Ms Josephine
Dlamini
Human resources director
Member
Spouse of Clearnol (major customer)
Member
21
Mr Williams enquired about which other board committees, besides the Audit Committee, they
would need to institute to comply with the King IV Report. Mr Williams suggested that all the
members of the board should also be members of the Audit Committee.
Revenue and receipts
The revenue system at Faced has experienced some challenges and received several complaints
from customers who have not always received their stock. Mr William, the finance director
investigated and identified the following risks in the system.
Risk 1: Orders may not be acted upon timeously or at all, resulting in a loss of sales.
Risk 2: Orders may be accepted from non-account holders.
Risk 3: A sale may be made to a customer who exceeded his credit limit.
Risk 4: Goods may be removed from inventory for unauthorised sales.
Risk 5: Customers are not notified of “out of stock” items.
Risk 6: Customers may deny having received goods.
Risk 7: Goods dispatched may not be invoiced.
Risk 8: Invoices may be omitted or duplicated in the sales journal.
REQUIRED
1.1
With reference to the board and its committees’, comment on whether Faced
complies with the requirements of sound corporate governance in terms of the
King IV Report.
Present your answer under the following headings:
(i)
Board of Directors: Composition and appointment (five comments)
(ii)
Remuneration Committee: Composition and appointment (five
comments)
MARKS
(11)
(8)
You should mention the relevant recommended practice according to King IV as well
as discuss issues in respect of compliance and non-compliance with the King IV
Report in your answer.
One presentation mark will be awarded if the answer is presented under the correct
headings and for communication, logical reasoning and structure.
1.2
1.3
Advise Mr. Williams regarding the board committees required by Faced to
comply with the King IV Report?
(1)
(3)
Mr Williams indicated that all the board members should be members of the
Audit Committee:
1.3.1 Indicate whether or not each of the board members would be eligible
to serve on the Audit Committee.
(7)
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1.3.2 Provide a reason for your answer in 1.3.1.
(10.5)
Present your answer in tabular format:
#
Name
1. Example:
1.3.1 Eligible (Yes/No)
1.3.2 Reason
(1 × 7 = 7 marks)
(1.5 × 7 = 10.5 marks)
Example:
Example:
Mr
Nathan Yes
Sawyer
He is an independent nonexecutive director.
A half presentation mark will be awarded if the answer is presented in tabular
format, and for communication, logical reasoning and structure.
(0.5)
Regarding the “Revenue and receipts” section:
1.4
Identify an internal control measure that Faced should implement to address
each of the risks identified (Risks 1–8).
(12)
Provide your answer in tabular format:
Risk
Internal Control
Risk 1: Orders not acted upon
Risk 2: Orders accepted from
non-account holders
Risk 3: Sale made to customer
exceeding credit limit
Risk 4: Inventory removed for
unauthorised sales
Risk 5: Customer not notified of
“out of stock” items
Risk 6: Customer
receiving goods
denies
Risk 7: Dispatched goods not
invoiced
Risk 8: Omitted or duplicated
invoices in sales journal
One presentation mark will be awarded if the answer is presented in tabular
format, and for communication, logical reasoning and structure.
(1)
23
QUESTION 2
54 MARKS
You are an audit senior at YMC Auditors. Your firm was recently appointed auditors of Warrior
In Action Ltd (hereafter referred to as “Warrior In Action”), a company that manufactures action
figurines of characters in sci-fi movies. The audit partner placed you in charge of the audit due
to your interest in sci-fi movies.
Internal controls for the acquisition and payment of suppliers
Ms Sibongile (the finance manager) explained that due to an error that occurred previously with
the receipt of raw materials, the following internal controls have been implemented when
acquiring materials and making payments to suppliers.
(i)
The order clerk receives an authorised requisition before preparing an order for approval
by the senior buyer.
(ii)
The buyer will approve the order after verifying that the supplier is on the approved
supplier list and validating the prices as well as the reliability of the supplier.
(iii)
On delivery of the goods, the goods receiving clerk will confirm the description and
quantity of the goods received against the purchase order before accepting the order.
(iv)
Where the condition of the goods received are not satisfactory or there are differences in
the quantity and so on, this is recorded on the delivery note and signed by both the goods
receiving clerk and the driver.
(v)
The purchase invoices received from suppliers are matched to the corresponding goods
received note, delivery note and purchase order for the quantity and description of goods.
(vi)
Payments to creditors are created by the creditors clerk along with the supporting
reconciliation (including invoices) and uploaded on the system for approval of payment by
the finance manager and finance director.
(vii) The senior bookkeeper prepares a reconciliation between the cash book and the bank
statement and this is reviewed by the finance manager for any discrepancies.
Inventory
You evaluate the controls around inventory in the warehouse and identify that the following
controls have been implemented:
a.
The warehouse is monitored by closed-circuit television 24 hours a day.
b.
The company has a receiving supervisor, a despatch supervisor and a warehouse
controller who is responsible for the custody of inventory.
c.
Fred Nkosi, the warehouse controller has read only access to the inventory masterfile.
d.
The warehouse is separated into two areas, area 1 where goods are received from
suppliers and area 2 where components are issued for production.
e.
The warehouse foreman signs a “goods received note” when components are transferred
from the goods receiving bay to the warehouse.
f.
The finance manager includes in the monthly pack to the Executive Committee an
analysis of the budgeted performance against the actual performance of the company..
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AUE2602/101/3/2021
g.
Warehouse personnel conduct cycle counts with an emphasis on expensive components.
h.
All discrepancies from cycle counts are thoroughly investigated. Any subsequent
adjustments to the inventory masterfile must be on a masterfile amendment form which
must be signed by the warehouse controller and the senior stores buyer.
Sale of vehicle
Warrior In Action’s board made the decision to sell one of their delivery vehicles at its current
retail value.
Internal audit report
The internal audit report revealed that controls over passwords were weak and passwords were
not regularly changed.
REQUIRED
MARKS
2.1
Based on the internal controls implemented for the acquisition and
payment of suppliers, do the following:
2.1.1
Identify the function in the acquisition and payment cycle where the
internal control listed as (i) to (vii) are most likely to occur;
(10.5)
List one (1) potential risk that could arise if Warrior In Action does not
implement the internal controls listed as (i) to (vii).
(10.5)
2.1.2
Present your answer in tabular format:
Internal
control
2.1.1 Function
(1.5 × 7 = 10.5)
2.1.2 Risk
(1.5 × 7 = 10.5)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
One presentation mark will be awarded if the answer is presented in
tabular format, and for communication, logical reasoning and structure
2.2
(1)
Based on the internal controls implemented over the inventory in their
warehouse, do the following:
25
2.2.1
2.2.2
Identify whether the controls implemented, listed as (a) to (h) is a general
or application control;
(8)
Describe the specific control activity to which each internal control, listed
as (a) to (h) relates.
(8)
Present your answer in tabular format:
#
2.2.1 General or
application control
2.2.2 Control activity
(1 × 8 = 8)
(1 × 8 = 8)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
2.3
2.4
8.7
One presentation mark will be awarded if the answer is presented in
tabular format, and for communication, logical reasoning and structure
(1)
Based on the information in the “Sale of vehicle” section, explain the
criteria that should be applied to determine whether the sale of the delivery
vehicle can be considered a non-routine transaction.
(6)
Based on the internal auditor’s report, list eight controls that Warrior In
Action should have in place for the changing of passwords.
(8)
Other assessment methods
An examination paper which serves as a self-evaluation assessment is included hereafter.
Special instructions for answering this assessment opportunity
It is advised that you complete this assessment opportunity under examination conditions within
three hours without consulting your study material.
After completing this, you should compare your answers with the key in Tutorial Letter 201. This
assessment opportunity must not be sent to the university.
Study material for this assessment opportunity
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AUE2602/101/3/2021
This assessment opportunity deals with the entire content of this module.
Purpose of this assessment opportunity
The purpose of this assessment opportunity is to serve as a revision opportunity of the study
material as a whole and at the same time is an indication of the standard that you can expect in
the examination.
Below is a previous examination paper that serves as a self-assessment assignment.
QUESTION 1
50 MARKS
You are an audit trainee at Green Tick Inc. a firm of registered auditors in Johannesburg. You
were recently assigned to the audit of SaveUPlenty Limited (hereafter referred to as
“SaveUPlenty”). SaveUPlenty is a supermarket chain that focuses on fresh produce and offers a
wider range of choice food items. The following information pertains to SaveUPlenty:
Corporate governance practices
Position
Member
of Member of Audit
Governing Body Committee
(Board
of
Directors)
Virat Amla
Chief Executive Officer (CEO)
Chairperson
Frans
Klewsner
Noddy Nkwe
Mary Smith
Marshall
Gibbs
Gertrude
Moloi
Thabiso
Mudau
Note
Operations Director
Yes
Managing Director
Independent non-executive director
Independent non-executive director
Yes
Yes
Yes
Independent non-executive director
Yes
Independent non-executive director
Yes
Note 1:
1
Chairperson
Yes
Yes
2
The board met twice during the first financial year.
Note 2: At the only meeting held by the audit committee during the first financial year, a
decision was taken that the committee’s only duty is to nominate the external auditor for
appointment. The audit committee will have a first meeting with the external auditors next month.
Note 3: SaveUPlenty is compiling with their first integrated report, however the CEO indicated
to you that he does not know what the six capitals are that the King IV Report make frequent
reference to.
Continuity of operations
27
Mr Amla wants to develop an information technology (IT) disaster recovery plan as part of sound
controls to minimise disruption should a disaster occur that could prevent processing and/or
destroy financial data.
Password controls
SaveUPlenty makes use of computerised accounting software when calculating the wages of their
employees. All the data is accessible from the various factories via an internet connection. Each
factory foreperson can access the data to verify hours worked as well as to update the employee
masterfiles. You obtained a screenshot of the password settings currently in use at the factories:
ACCOUNT AND PASSWORD SETTINGS – SAVEUPLENTY LTD SOFTWARE
Detail
Setting
Maximum password age
6 months
Minimum password length
4 characters
Password must meet complexity requirements
Disabled
Store password using encryption
Disabled
Users must change password at first logon
Disabled
Show characters when typing passwords
Enabled
Allow the same password for different usernames
Enabled
Automatically log failed login attempts
Disabled
Payroll and Personnel
On arriving at or leaving work, employees tick off their names on a “daily time list”, entering their
time of arrival or departure in the space provided. A large clock is located in the gate hut. The
other controls relating to payroll remained the same.”
REQUIRED
1.1
MARKS
With reference to the “Corporate governance” section, comment on
the information that SaveUPlenty Limited provided with reference to the
requirements of sound corporate governance in terms of the King IV
Report.
Present your answer under the following headings:
f)
Governing Body (Board of directors): composition and
appointments (five comments)
g)
Audit committee: composition and appointments (three
comments)
h)
Audit committee: meetings (two comments)
i)
General remarks (two comments)

(4½)
(3)
(3)
You should discuss issues in respect of both compliance and
non-compliance with the King IV Report in your answer.
Two presentation marks will be awarded if the answer is presented
under the correct headings, and for communication, logical
reasoning and structure.
(2)
List the SIX (6) capitals as referred to in the King IV Report that
SaveUPlenty should report on in the integrated report.
(3)

1.2
(7½)
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AUE2602/101/3/2021
1.3
1.4
1.5
This question refers to the “Continuity of operations” section:
Describe the controls that Mr C Amla should implement at
SaveUPlenty Limited to minimise information technology (IT) disruption
as a result of some disaster. Limit your answer to the disaster
recovery plan.
(6)
This question refers to the “payroll and personnel” section:
Identify EIGHT (8) weaknesses in SaveUPlenty’s “account and
password settings” procedures, when considering the screenshot
obtained by you.
(12)
This question refers to the “payroll and personnel” section:
1.5.1 Explain four (4) weaknesses in SaveUPlenty’s wage system.
Limit your answer to the timekeeping function.
(6)
1.5.2 Explain what the term biometric data means in a computerised
clocking system.
(1.5)
1.5.3 Describe one advantage of biometric data over an identification
card or a clock card.
(1.5)
QUESTION 2
50 MARKS
Inventory
SaveUPlenty has comprehensive internal controls in place to ensure the inventory is
safeguarded against theft and misappropriation. However on review of the current year’s
financial statements, the external auditors reported material discrepancies between
physical inventory on hand and perpetual inventory in the financial records. As a result,
the CEO requested Internal Audit to perform an investigation into the effectiveness of
the system of internal control over the ordering of goods, as an important function in the
purchasing of inventory for the company.
The following controls were implemented in the inventory cycle:
1.
2.
3.
4.
5.
6.
7.
Entry to and exit from the warehouse are monitored 24 hours a day by surveillance
cameras.
The company has a receiving supervisor, a despatch supervisor, and a stores
controller who is responsible for the custody of inventory.
The financial controller, receiving supervisor, despatch supervisor and stores
controller all have the necessary skills and qualifications applicable to their job
descriptions.
The company has a full inventory count every two months which is attended by the
financial controller and external auditors.
One of the warehousing section’s objectives is to keep theft of inventory below 1%
of the total cost of inventory on hand. This is monitored monthly.
Pickers sign the picking slip after they have selected the goods from the store.
Any warehouse personnel, who are caught stealing inventory, are dismissed
immediately.
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Ordering of goods
Internal Audit identified the following risks in the ordering of goods function, which
could occur due to weaknesses in the system of internal control:
1. Ordering incorrect or unnecessary goods, resulting in liquidity problems and wastage.
2. Ordering unauthorised goods, resulting in losses to the company through fraud.
3. Obtaining goods of inferior quality.
4. Paying unnecessarily high prices for goods ordered.
5. Placing orders with suppliers that do not deliver/do not deliver timeously.
6. Abusing order forms, for example by placing orders for private purchases.
Capital investment
SaveUPlenty want to buy and install new fridges for the supermarkets country wide, as
the fridges that they have is not energy efficient. As this is a large capital expenditure
the managing director asked you, the audit manager to assist in documenting the
controls that should be implemented when making the purchase.
REQUIRED
2.1
2.2
MARKS
Describe FOUR (4) internal controls that should be implemented to
mitigate the risks associated with the movement of inventory from the
goods for resale warehouse to the despatch section
(6)
Two of the components of internal control in terms of ISA 315 are
control environment and control activities. There are five different
categories of control activities.
For each of the inventory controls provided in the question (1-7),
indicate whether it relates to the control environment or control
activities. Where your answer is control activities, indicate into which
category of control activity it falls.
(15)
Present your answer in the following table format:
No.
Control
environment/ Control activity if applicable
Control activity
1
Example: Control Activity
Example: Access Controls
2
3
4
5
6
7
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AUE2602/101/3/2021

Number 1 is included above as an example and no marks will
be awarded for this.
One mark will be awarded for the correct presentation of your
answer
(1)
Describe the procedures to be followed when conducting a physical
year-end inventory count.
(9)
Advise management of the internal controls (in a manual system) that
could be implemented to mitigate the risks that you identified relating
to the ordering of goods.
(12)

2.3
2.4
Present your answer in the following format:
Risk No
1
2
3
4
5
6
2.5
Internal control
(Give ONE control)
(Give TWO controls)
(Give ONE control)
(Give ONE control)
(Give TWO controls)
(Give ONE control)
This question refers to the “Capital Investment” section:
Describe any FOUR (4) compensating internal controls to be
implemented to address the risks of material misstatement when
purchasing the fridges.
8.8
(1)
(6)
The examination
Requirements for admission to the examination
Submission of compulsory Assignment 01 or Assignment 02 by its due date will give you
admission to the examination in this module. Admission will be obtained by submitting this
assignment in time and not by the marks you obtain for it. Please ensure that this assignment
reaches the university before or on its due date. Late submission of the assignment will result in
you not being admitted to the examination. No extension will be given for the late submission of
Assignments 01 and 02.
Examination period
This module is offered in both semesters. This means that if you are registered for the first
semester, you will write the examination in May/June 2021 and the supplementary examination
will be written in October/November 2021. If you are registered for the second semester, you will
write the examination in October/November 2021 and the supplementary examination will be
written in May/June 2022.
During the semester, the examination section will send you information on the examination in
general and your examination venue, date and time.
Format of the examination paper
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The duration of the examination will be two hours. The examination paper will consist of a case
study with questions. Students will have to apply their theoretical knowledge to the information
provided in the case study. The examination will not contain any multiple-choice or theoretical
questions.
9
FREQUENTLY ASKED QUESTIONS
Calculator policy
Candidates may only use silent, electronic, battery-driven pocket calculators subject to the
following conditions:
•
•
•
•
Calculators must be cordless, and may not have print-out facilities or alpha keys.
Any financial calculator will be allowed, as the following tables will not be provided:
o tables of present value factors for various discount rates for varying periods
o tables of future value factors for various interest rates for varying periods
The calculator function on cellphones or any electronic device (such as laptops and/or smart
phones) may not be used.
A candidate may not share a calculator with another candidate in the examination room .
Previous examination papers
Previous examination papers are available to students on myUnisa. Suggested solutions are not
provided. You may, however, accept that the type of questions that will be asked in the
examination will be similar to those in your study material.
See Study @ Unisa for general guidance for the examination as well as for examination
preparation.
10
IN CLOSING
We are here to assist you where we can with the content of the module. Please make the most
of your opportunity to study this module.
We wish you every success with your Auditing studies!
Your lecturers.
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