Calculators/Sakrekenaars:
Requirements for this paper/Benodigdhede vir hierdie vraestel:
Answer scripts/
Antwoordskrifte:
X
Yes
Other resources/Ander hulpmiddels:
None
Multi-choice cards (A5)/
Multikeusekaarte (A5):
Attendance slips (Fill-in paper)/
Presensiestrokies (Invulvraestel):
Multi-choice cards (A4)/
Multikeusekaarte (A4):
Scrap paper/
Rofwerkpapier:
Graph paper/
Grafiekpapier:
Type of assessment/
Tipe assessering:
1st Opportunity Exam
Qualification/ BCom Financial
Kwalifikasie: Accountancy
Module code/
Modulekode:
EAGR271
Duration/
Tydsduur:
Module description/
Modulebeskrywing:
An introduction to Corporate Governance, Max/
Audit Environment and Professional
Maks:
Ethics
80 marks
Examiner(s)/
Eksaminator(e):
Mrs N Kganakga,
Mr M Tshabalala,
Mr TI Dipale,
Ms E Ritho
Date/
Datum:
14/11/2023
Moderator(s) /
Moderator(e):
Ms R van der Merwe
Time/
Tyd:
09:00
Submission of answer scripts/Inhandiging van antwoordskrifte:
160 minutes
Ordinary
Examination instructions / Eksamenvoorskrifte
1.
Students are allowed into the venue in the first half hour of a session, but no
extra time is granted.
1.
Studente mag in die eerste halfuur van 'n sessie tot die lokaal toegelaat word,
maar geen ekstra tyd word toegestaan nie.
2.
No student is allowed to leave the venue before half an hour of the
examination session has elapsed.
2.
Geen student word toegelaat om die lokaal te verlaat binne die eerste halfuur
van 'n eksamensessie nie.
3.
Students bring bags to the venue at own risk, and must put them in front of
the room.
3.
Studente bring sakke na lokaal op eie risiko, en moet dit voor in die lokaal
neersit.
4.
Students may not have cell phones/electronic devices with them and/or
handle them.
4.
Studente mag nie selfone/elektroniese toestelle by hulle hê en/of hanteer nie.
5.
Geen verversings word in 'n eksamenlokaal toegelaat nie.
5.
No refreshments are allowed in the examination venue.
6.
Studente mag nie die lokaal verlaat om te gaan rook nie.
6.
Students may not leave the room for a smoke break.
7.
Skryf op beide kante van die bladsye.
7.
Write on both sides of each page.
8.
Skryf slegs in swart of blou ink.
8.
Write in black or blue ink only.
9.
Geen bladsye mag uit die antwoordskrif verwyder word nie.
9.
No pages may be removed from the answer scripts.
10.
10.
Students may not have unauthorised material with them during a session, e.g.
notes and/or objects that contain notes.
Studente mag nie ontoelaatbare materiaal by hulle hê tydens 'n sessie nie,
bv. notas en/of objekte wat notas bevat nie.
11.
Geen items mag tydens die sessie geleen word nie.
11.
No items may be borrowed during the session.
12.
Studente mag nie 'n ander student probeer help of probeer om hulp te kry nie.
12.
Students may not attempt to assist another student, or attempt to obtain
assistance.
13.
Studente moet hul antwoordskrifte aan toesighouers oorhandig voordat hulle
die lokaal verlaat.
13.
Students must hand in their answer scrips to invigilators before they leave the
venue.
14.
Die presensiestrokie op die agterblad, wat ook as onderneming geld, moet
voltooi en ingegee word.
14.
The attendance slip on the back cover that also serves as an undertaking,
must be completed and handed in.
15.
Slim-horlosies / slimfone word nie toegelaat nie.
15.
Smart watches / smart phone watches are NOT allowed
Disclaimer: All the names of persons, places and business entities mentioned in this examination paper are
fictitious and any resemblance to real persons, living or dead, places and business entities are purely coincidental
QUESTION 1
(15 MARKS)
__________________________________________________________________________
EAGR271 1ST OPPORTUNITY EXAM - 2023
1/11
You are a first-year audit clerk at Vaal and Partners Inc. (hereafter VP), an auditing firm based
in Mahikeng. VP was recently appointed to assist the North West Department of Human
Settlements (hereafter the Department) for the next three (3) years with improving their control
environment in order to manage the risks associate with their operations. Ms Betty Thomas,
the Department’s financial manager has requested your firm to assist her with a presentation
that she will be making at a seminar for provincial legislation on internal controls and corporate
governance. Your audit partner has asked you to assist Ms Betty Thomas.
The question consists of two (2) unrelated parts:
PART A
Ms Betty Thomas’s first inquiry is on key concepts and their relevant descriptions / statements,
and she has provided you with these descriptions as well as a word bank of the different key
concepts:
DESCRIPTION/STATEMENT
WORD BANK
A. This consists of activities and policies, accounting and • Internal control
supporting records, all designed and established to • Business risk
initiate, record, process and report transactions.
• Risk assessment process
B. This involves assessing risks facing the entity and how • Information system
they should be addressed.
• Control activities
C. The exercise of ethical and effective leadership by the • Control environment
governing body towards the achievement of certain • Integrity
outcomes like good performance.
• Corporate governance
D. The system designed, implemented and maintained by
those charged with governance, management and
other personnel to provide reasonable assurance
about the achievement of an entity’s objectives.
E. Actions, supported by policies and procedures, that are
carried out to manage or reduce the risks that the
organisation’s objectives will not be met.
REQUIRED:
1.1
Select ONE word from the word bank provided above that best fits
each description/statement listed from A to E.
A word can only be used ONCE. Only write the letter and the
relevant word, e.g. Z. System.
YOU MUST USE CAPITAL LETTERS.
TOTAL MARKS FOR QUESTION 1.1
SUBTOTAL
5x1
TOTAL
5
5
5
PART B
Ms Betty Thomas’s second inquiry is on internal controls over the information technology (IT)
environment and consist of a few statements or questions:
1.2.1 Controls over the implementation of a new accounting system can be classified as
application controls.
A. True
__________________________________________________________________________
EAGR271 1ST OPPORTUNITY EXAM - 2023
2/11
B. False
1.2.2 General information technology (IT) controls are any controls within an application which
contributes to the accurate and complete recording and processing of transactions that
have occurred and have been authorised.
A. True
B. False
1.2.3 Automated application controls are those controls which establish an overall framework
of control for computer activities.
A. True
B. False
1.2.4 The principle for application controls that ensures that less information has to be
captured, less errors are likely to occur, and less time is taken, refers to….
A. Mandatory checks
B. Shading of fields
C. Checking digits
D. Format checks
E. Minimum keying in of information
1.2.5 Which one of the following is not part of the “format checks” used in application controls?
A. Alpha-numeric checks
B. Size checks
C. Matching test
D. Mandatory field / missing data checks
E. Valid character and sign check
1.2.6 As part of batch controls, a batch control sheet should be prepared and attached to each
batch. Which of the following forms part of the information that should be captured on
the batch control sheet?
A. Control totals
B. Field reference
C. Mandatory fields
D. Dependency checks
E. Input checks
1.2.7 As part of application controls, a ___________ detects blanks or a lack of input in a field.
For example, if quantity is not entered in a quantity field on an internal sales order, the
data capturing cannot continue.
A. Size checks
B. Alpha-numeric checks
C. Valid character and sign checks
D. Mandatory field / missing data checks
E. Check digits
1.2.8 When an invoice is captured, the screen should look like the hard copy invoice. This is
an example of:
__________________________________________________________________________
EAGR271 1ST OPPORTUNITY EXAM - 2023
3/11
A. A sequence check
B. A user control
C. Screen formatting
D. A validation test
E. A limit check
1.2.9 A mandatory field / missing data check is an example of a dependency check as part of
application controls:
A. True
B. False
1.2.10 When capturing information on a screen, a mandatory field will indicate a field where
the keying in of information has to happen as the system will not continue until this
particular field has been entered.
A. True
B. False
REQUIRED:
1.2
For each statement / question (1.2.1 to 1.2.10), select ONE
alternative which you consider as the most correct.
Select the letter and indicate it next to it the question number in
your answer book.
YOU MUST USE CAPITAL LETTERS.
TOTAL MARKS FOR QUESTION 1.2
QUESTION 2
SUBTOTAL
10 x 1
TOTAL
10
10
10
(13 MARKS)
You have just been appointed as the financial manager of Activate Fitness (Pty) Ltd (hereafter
Activate Fitness), a retail company that sells branded fitness equipment and gym clothing in
the Mahikeng central business district. You have been asked by the financial director to review
the controls relating to the “despatch function” within the revenue and receipts cycle of Activate
Fitness, as there has been several problems and risks identified in the cycle recently.
The following extract of the system description was made available to you:
Revenue and receipts cycle – Despatch function
• On receipt of the goods, picking slip and delivery notes from the warehouse, the
despatch clerk, Mr Lynnwood, checks the description of the goods against the
authorised picking slip and delivery note. He signs the picking slip to acknowledge
receipt of goods. He then retains two (2) copies of the delivery note and returns the
signed picking slips to the warehouse, once goods are packed.
• The goods are then packed into a box for delivery and the address on the box is
checked against the delivery address on the documentation and the box is sealed
immediately by the packing clerk, Mrs Patel. Mrs Patel signs the box as proof of goods
packed.
• Mr Lynnwood then prepares a two-part list of deliveries and matches it to the physical
goods loaded onto the vehicle, after which it is signed by him as proof of control
activities performed.
__________________________________________________________________________
EAGR271 1ST OPPORTUNITY EXAM - 2023
4/11
•
•
•
Mr Blyden, the vehicle driver, takes custody of the goods in his vehicle after it has been
loaded, then signs a copy of the list of deliveries to acknowledge receipt of the delivery
notes and the corresponding goods. He retains one (1) copy of the list of deliveries and
the delivery notes, and Mr Lynnwood retains a signed copy of the list of deliveries.
The security guard at the gate, Mr Zwelakhe, checks all goods to be delivered by
Mr Blyden and ensures that they appear on the list of deliveries and are supported by
delivery notes. Mr Zwelakhe opens the gate for Mr Blyden, the driver, to drive through.
On delivery of the goods, Mr Blyden requires the customer to sign one (1) of the delivery
notes, after they have checked the goods, before the goods are handed over. He then
gives the signed copy of the delivery note to the customer and retains the other copy.
REQUIRED:
2.1 Identify six (6) weaknesses in the “Despatch” function of Activate
Fitness, based on the information provided above.
Provide a recommendation for each weakness identified.
SUBTOTAL
12 x 1
TOTAL
13
Your answer should be presented in the following table format:
Weakness
1 mark each
Recommendation
1 mark each
Communication skills – Presentation
TOTAL MARKS FOR QUESTION 2
QUESTION 3
1x1
13
13
(14 MARKS)
You are a first-year audit clerk at Boysin Auditors and Accountants Inc. You have been
assigned to the audit of a new client, Revolving Debit Line Ltd (hereafter RDL). RDL is one (1)
of South Africa’s leading food retailers and is listed on the Johannesburg Stock Exchange
(JSE). RDL sells food, beverages, and quality culinary products to consumers across the
country. The company has three (3) branches in South Africa (Mahikeng, Potchefstroom, and
Vanderbijlpark) and has a 31 August 2023 year-end. The bonuses of RDL’s board of directors
are directly linked to the profit after tax in the Statement of profit or loss and other
comprehensive Income.
The audit manager, Mr. Basil, indicated to you that you should consider the above information
when the risk of material misstatement (RoMM) at the overall financial statement level is
considered. You were assigned to assist with the planning of the audit of RDL. Planning of the
audit assists the auditor in formulating an audit strategy for an engagement, resulting in an
effective and efficient audit being performed as a whole.
Information regarding the materiality figure:
__________________________________________________________________________
EAGR271 1ST OPPORTUNITY EXAM - 2023
5/11
Mr. Basil indicated that you would need to use the gross profit figure of R15 000 000 to
calculate the planning materiality figure. He further explained that the audit risk has been
assessed as low.
REQUIRED:
3.1 Describe four (4) advantages of audit planning.
3.2 Describe three (3) matters that an auditor will consider when
determining whether or not a risk is a significant risk.
3.3 Identify two (2) risk indicators for the risk of material
misstatement (RoMM) at the overall financial statement level,
based on the information provided above. For each risk indicator
identified, discuss one (1) risk implication for the RoMM.
You are required to present your answer in the following table
format:
Risk indicator
Discussion of the risk
implication for RoMM
0.5 mark each – max 1
1 mark each – max 2 marks
mark
Communication skills – presentation
3.4 Based on the information provided above regarding the
materiality figure, calculate the planning materiality figure and
provide a reason for your answer.
TOTAL MARKS FOR QUESTION 3
SUBTOTAL
4x1
3x1
TOTAL
2 x 0.5
4
4
3
2x1
1
3x1
3
14
14
QUESTION 4
(6 MARKS)
You are a first-year audit clerk at Numeriq Auditors and Accountants Inc. You have been
assigned to the audit of Save & Shop (Pty) Ltd (hereafter Save & Shop), one (1) of South
Africa’s leading supermarkets. Save & Shop sells TriStar and Tiger Brands food, home and
personal care products to consumers. The company has various branches across South Africa
and has a 31 August 2023 year-end. You were assigned to assist in determining the audit
sample for the sales line item on the financial statements.
For each sales transaction recorded, a sales invoice has been issued. During the year ended
31 August 2023, pre-numbered invoices from 15504 to 20453 were issued in number
sequence.
The sample size to perform test of controls to test the completeness of revenue, have been
determined as 450 sales invoices.
REQUIRED:
4.1 Identify the first two (2) invoice numbers to be selected by
making use of the systematic selection method.
Use the 8th invoice as your starting point. Please show all
calculations.
4.2 Identify the first two (2) invoice numbers to be selected by
making use of the random number selection method, using the
attached Annexure A.
SUBTOTAL
4x1
TOTAL
2x1
2
4
__________________________________________________________________________
EAGR271 1ST OPPORTUNITY EXAM - 2023
6/11
Use column B, row 2 as your starting point, and work your way
downwards. Once you move to the next column, start at the top.
TOTAL MARKS FOR QUESTION 4
6
6
QUESTION 5
(9 MARKS)
You are a first-year audit clerk at ORNET Inc. (hereafter referred to as ORNET). You have
been assigned to the audit of Afford2Build (Pty) Ltd (hereafter Afford2Build), one (1) of South
Africa’s leading building material stores. Afford2Build sells JoJo tanks, tiles, waterproofing
tapes, wheelbarrows, and other building supplies to consumers. The company has various
branches across South Africa, Namibia, Botswana, Lesotho and Mozambique and has a
31 August 2023 year-end. You were assigned to assist in obtaining audit evidence of
Afford2Build.
Test of controls over revenue were completed by another audit team member and all controls
tested were found to be effective. A combined audit approach (test of controls and substantive
procedures) will therefore be followed by the audit team to test Afford2Build’s revenue.
During the October school holidays, ORNET employs university students in the vacation work
programme. Mr Keen Port, a university student, has been employed by ORNET and was
assigned to assist you on the audit of Afford2Build. He was requested to assist with preparing
a working paper that will be used to document the substantive procedures performed over the
revenue line item of the financial statements. Mr Port has prepared the working paper below
and has asked for your assistance to evaluate whether it meets the requirements of an audit
working paper.
A1 - Revenue
Client:
Year-end:
Compiler:
ORNET Inc.
Afford2Build (Pty) Ltd
31 August 2023
Date:
5 October 2023
Reviewer:
Date:
6 October 2023
Objective: To perform substantive procedures over the revenue amount.
Work performed:
Assertion:
1 Cut-off
2 Completeness
Procedure:
REQUIRED:
5.1 Define the two (2) assertions (Cut-off and Completeness) listed
on the working paper for classes of transactions, e.g. Revenue.
5.2 Explain the concept of substantive procedures.
5.3 Name two (2) types of test of controls.
Result:
SUBTOTAL
2x1
TOTAL
2x1
2 x 0.5
2
1
2
__________________________________________________________________________
EAGR271 1ST OPPORTUNITY EXAM - 2023
7/11
5.4 By referring to the working paper extract provided, identify four
(4) weaknesses, based on only the requirements of working
papers.
TOTAL MARKS FOR QUESTION 5
4x1
4
9
9
QUESTION 6
(6 MARKS)
You are a second-year audit clerk at Bona-Bona Inc., a small sized auditing firm located in
Krugersdorp, Gauteng. You have joined the audit team of 5-Star (Pty) Ltd (hereafter 5-Star).
The 5-Star brand has been a well-known and well-loved South African maize brand over the
last few decades. At the point when you joined the audit team, the planning phase of the audit
had been completed by other team members and you have identified in the audit strategy
document that you have been assigned to audit the revenue and receipts cycle, for the financial
period ending 31 July 2023.
Revenue and receipts cycle:
5-Star sales consist of credit sales only. The following is an extract of the 5-Star revenue and
receipts’ system description that was documented during the planning phase of the audit:
Function: Receiving customer orders
Customers can place an order by completing the customer order form physically or by phoning.
The order clerks are responsible for taking the orders.
A. For telephonic orders, the order clerk reads back the details of the order placed to the
customer for accuracy and completeness.
B. After issuing an internal sales order (ISO), the order clerk signs it as proof of work
performed.
C. The supervisor reviews and cross references all the internal sales orders (ISOs) to the
customer orders, after which he/she signs the ISOs as proof of review and crossreferencing.
REQUIRED:
6.1 Formulate the most appropriate test of controls that you would
perform to confirm that each of the control activities in the
“receiving customer orders” function, listed in A to C as provided
above, are operating effectively.
Write each letter (A – C) with your answer next to it.
6.2 Describe three (3) detail substantive procedures that you would
perform on a sample of sales invoices selected from the sales
journal, to confirm the accuracy assertion of the sales amount in
the trial balance for the 31 July 2023 year end.
TOTAL MARKS FOR QUESTION 6
QUESTION 7
SUBTOTAL
3x1
TOTAL
3x1
3
6
6
3
(17 MARKS)
You are a first-year audit clerk at Bredenkamp Inc., a small-sized auditing firm. You have been
allocated to the audit of Shop4Africa Ltd, one (1) of South Africa’s leading supermarkets.
Shop4Africa Ltd sells food, toiletry, cleaning and other household items to consumers. The
company has various branches across South Africa. The company has a 30 September 2023
year-end. You were tasked to assist with the following aspects on the audit:
__________________________________________________________________________
EAGR271 1ST OPPORTUNITY EXAM - 2023
8/11
Bank and cash cycle:
You were assigned to audit the accuracy, valuation and allocation assertion of the bank
balance. You were provided with the bank reconciliation below:
Shop4Africa Ltd:
Bank reconciliation as at 30 September 2023
Description
Note
Amount (R)
Balance as per bank statement
34 050 000
Plus: Outstanding deposits
(1)
1 000 000
Minus: Rent expense error
(2)
(50 000)
Balance as per bank control account (cash book)
35 000 000
Notes:
(1): An EFT deposit of R1 000 000 was made by Nakro Ltd, one of the customers of
Shop4Africa on 30 September 2023. The financial manager of Nakro Ltd e-mailed the proof of
payment to the debtor’s manager of Shop4Africa on the same day.
(2): The monthly rent expense of Shop4Africa is R150 000. For the month of September 2023
only R100 000 was deducted from the bank account via the monthly debit order. The bank
confirmed that it was a mistake on their side and will fix the issue in October 2023.
Payroll and personnel cycle:
During an audit team meeting, the audit manager indicated that one (1) of the circumstances
that can give rise to risk of material misstatements relating to salaries and wages, is the
inclusion of fictitious employees on the payroll. As auditors, we therefore want to ensure that
we address this risk by obtaining sufficient audit evidence. The audit manager also explained
that there could be problems with the cut-off and completeness of these salaries and wages,
which should be addressed by our detail and analytical substantive procedures.
Completion of the audit:
You were required to assist with the first four (4) steps of the completion of the audit.
REQUIRED:
7.1 With reference to the information provided for the bank and
cash cycle:
SUBTOTAL
6x1
TOTAL
6
Formulate six (6) detail substantive procedures that you would
perform on the bank reconciliation of Shop4Africa Ltd as at 30
September 2023.
__________________________________________________________________________
EAGR271 1ST OPPORTUNITY EXAM - 2023
9/11
7.2 With reference to the information provided for the payroll and
personnel cycle:
List the other four (4) assertions applicable to the salaries and
wages expense of Shop4Africa Ltd.
7.3 With reference to the information provided for the payroll and
personnel cycle:
Name any other two (2) circumstances that can give rise to a
risk of material misstatement relating to salaries and wages.
7.4 With reference to the information provided for the payroll and
personnel cycle:
Describe four (4) detail substantive procedures to be performed
to confirm that employees on the payroll of Shop4Africa Ltd are
not fictitious.
You can exclude any procedures on the employee masterfile.
7.5 With reference to the information provided for the completion
of the audit:
Describe the first four (4) steps that you will perform during the
completion stage of the audit.
TOTAL MARKS FOR QUESTION 7
4 x 0.5
2
2 x 0.5
1
4x1
4
4x1
4
17
17
**END OF PAPER***
TOTAL/TOTAAL: 80
__________________________________________________________________________
EAGR271 1ST OPPORTUNITY EXAM - 2023
10/11
Annexure A
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
A
79728
61948
43609
27464
97364
02025
89279
51453
86421
97283
28306
66833
42910
17100
18731
06028
63392
65603
68469
98952
47946
09231
80323
52968
68086
25872
89278
16128
60549
30270
B
30648
33220
00433
72374
35010
27419
06824
59173
96162
04779
68996
17203
39189
96496
65414
57035
04305
27792
89878
47272
41436
22213
74082
50937
04105
99414
61822
42049
53576
71072
C
44501
05921
80564
96393
46717
59528
92501
91322
49154
14125
46267
60069
98907
34486
09668
61742
35686
40624
78577
97842
71734
57609
20783
23851
05452
30724
30859
37871
29639
60642
D
30552
21724
16539
51626
39204
39295
75882
91730
59087
20956
52888
57112
99909
50092
15030
07835
41862
15946
55345
42040
94643
77955
01326
01491
24552
66520
94198
51026
60585
26707
E
94802
77652
32302
01731
55669
16869
02854
68419
79940
50279
24409
44653
03196
59196
90841
00897
47255
50464
41357
40213
52056
13545
78160
16499
09977
74694
13916
23513
63532
16899
F
20260
08701
62548
49849
71690
02352
45574
74654
67508
45349
89741
17831
30078
41529
33465
01722
59151
20334
40020
62118
30353
35665
67749
97935
30473
45680
29436
88568
40518
78243
G
53464
01702
28306
47784
97371
77785
68693
71254
47169
87777
78004
96035
45573
38910
23741
44863
16731
08060
75060
08595
25051
61095
69272
46084
05228
25066
26869
48602
24394
67908
H
97260
40438
68775
86436
85744
00401
51804
70139
87911
48904
81598
69584
48057
84744
80698
38439
46337
59840
84860
14499
11704
87844
49592
88501
40402
77467
64597
34374
30978
95187
__________________________________________________________________________
EAGR271 1ST OPPORTUNITY EXAM - 2023
11/11