COMMENTS RELATING TO THE 2013 PUBLIC PRACTICE EXAMINATION
Comments provided by (Name of institution and department):
Comments compiled by (Name of person):
Stellenbosch University, School of
Accountancy
Auditing lecturers at School of Accountancy (Prof
Rika Butler; Henriëtte Scholtz and Riaan Rudman),
Stiaan Lamprecht (Financial Accounting) and Corinna
Kirsten (Management Accounting)
Contact details of compiler:
Tel:
(021) 808 3703
Fax:
(021) 886 4176
E-mail:
rbutler@sun.ac.za
General Comments on Paper
a.
Appropriateness of examination to test professional competence
The exam was appropriate to test professional competence of the candidates at this level.
However, the paper contains a larger portion than usual of Financial Accounting (and a bit of
Management Accounting). Candidates might have found this ‘unexpected’. Some of the areas of
Financial Accounting that were tested were technical and industry specific. Some candidates
might have perceived this as difficult.
b.
Standard of question paper as a whole
The standard of the paper on a whole is quite high, especially in Question 1, which tested
specific areas in detail. Candidates without a detailed knowledge of these topics would have
struggled. Traditional areas of work which are tested every year (such as risk and approach)
were tested this year at a slightly higher level.
However as the solution contains easy as well as more difficult marks and already contains a
large percentage of additional marks (without any additional marks that may be added based
on the universities’ comments), it may decreases the perceived ‘difficulty’ of the paper.
However, the standard remains on the high side.
c.
The appropriateness of time allocation per paper
Both papers contained a lot of information that candidates had to read and interpret - about
10/11 pages each. Question 1 required candidates to obtain and integrate information across
various pages whereas Question 2 was more focused and better demarcated.
d.
The balance between questions and between papers
There was a good balance between the papers and the questions therein. The two papers
covered all major areas of the work appropriately.
e.
Any other relevant comment
The questions where Financial Accounting were tested, integrated the various aspects cleverly
with the Auditing content. The way in which Auditing aspects were integrated and tested was
also innovative.
Refer to the various sections and sub-sections of the papers for comments that might require
amendments to the wording on the solution and/or marks awarded.
Specific Comments: Question 1
Comments on each subsection of the question should inter alia, address the following:
a) The appropriateness of the standard of assessment.
b) The extent to which the question content and information provided in the scenario is
unambiguous and appropriate to the requirements of the specific questions.
c) The extent to which the requirements of the questions are clearly and unambiguously stated
in the suggested solutions.
d) The appropriateness of the time allocation to each question.
e) The appropriateness of the allocation of marks as set out in the suggested solutions.
f) Any other relevant comments.
Question 1: Section A
Part 1 – 25 marks
Comment
The question asked candidates to identify and
explain any concerns regarding professional
conduct of the named persons. Care should be
taken in the wording of the points on the memo
to ensure that they all relate to and address the
required.
Eg. the part the addresses section 45 of the
Companies Act in point 12: This part refers to
two Companies Act requirements without really
explaining how this bears on professional
conduct. Along the same line, there might also
be concerns that other Companies Act
requirements relating to the loan to McDonald
are not adhered to eg. disclosure of the loan
(sec 30), terms fair and reasonable, conditions
of the MOI, written notice, the directors’
liability.
The question specifically asks to address ethical
concerns, yet the conceptual framework is not
used in the answer i.e. identify threats for the
fundamental principles, determine significance
and implement safeguards.
EXAMCOM response
Noted and considered in the marking.
Point 3 - Section 240 of the SAICA CPCC: Low
charge out rates could create self-interest
threat for professional competence and due
Noted and considered in the marking.
Noted and considered in the marking.
care. This will be significant as the charge out
rates is 25% below market related rates.
Safeguards to implement should be:
Making the client aware of the terms of the
engagement and assigning appropriate time and
staff to the assignment.
Point 5 - Section 150 & 250: A self-interest
threat to professional behaviour is created with
the aggressive campaign. This will be significant
for the reasons provided in 5.1 and 5.2
Safeguards will be not to lodge the proposed
campaign and to consult with IRBA if in doubt.
Noted and considered in the marking.
Point 11 - Section 270: A self-interest threat for
professional behaviour might be created. This
will be significant for reasons provided in 10.110.3.
Safeguards would be include:
 Maintain bank accounts separate to the
firm’s bank accounts ito Bank’s Act.
 Appropriately designate such accounts.
 Deposit monies without delay.
 Be ready to account for monies at all
times.
 Comply with all relevant laws and
regulations.
Noted and considered in the marking.
Point 13 - Section 140: A self-interest threat for Noted and considered in the marking.
confidentiality would exist. The threat is
significant, for reasons stated in 13.1.
In the decision-making on whether confidential
information must be used the following must
have been addressed: if any party, which is
involved with this matter, be negatively affected
when the information is used, was the
information substantiated and known.
Part 2 – 26 marks
Comment
The risk question is rather difficult compared to
prior years, but at an appropriate standard. Th
question did not include generic risks that are
EXAMCOM response
Noted
usually found in questions (such as, the
company is listed, shareholders and directors
are profit driven etc). The risk question required
candidates to integrate a bit of Accounting
knowledge as well.
The mark allocation was sufficient.
The required part was not very clear, which
might have impacted the candidates’ answers.
 The question asks for risks relating to
Revenue and Financial instruments. The
solution lists risks at a financial statement
level which could impact the account as
well as risks at an assertion level.
Candidates might have interpreted the
required as only requiring them to lists risks
that can directly be linked to the two
accounts listed and therefore might not
have included risks at financial statement
level. These candidates would be
disadvantaged.
 The solution also contains risks relating to
accounts associated with Revenue and
Financial Instruments, such as Debtors etc.
As a result some candidates might not have
included these risks as they didn’t perceive
it to be part of their answers.
Noted and considered in the marking.
Noted and considered in the marking.
Question 1: Section B
Part 3 – 21 marks
Comment
The standard of this question was high.
Finding 1:
 The question contains no information
that indicates points 1.1 and 1.1.1 in the
solution.
 Although the solution distinguishes (and
rightly so) between online registrations
and forms manually completed, there
are certain controls that would be
applicable to both methods of
registration, despite the fact that
controls are only included under either
the one or the other method of
EXAMCOM response
Noted.
Noted and considered

registration. The solution should be
expanded to include these controls
under both headings. Examples of
controls applicable to both methods
are:
o Screen layout and prompting
o Edit checks
o Compulsory fields to register
successfully
o Exception reports to be printed
and followed-up
Candidates may not have included
controls regarding the issue of bidding
paddles in their answer (refer to point 3
in the solution).
Finding 2:
 An additional control that might be
added to the solution is that
investigation and follow-up of
complaints received.
Finding 3:
 Using a batch system (refer to point 12
on the solution) would not directly
address the internal control weakness
concerned i.e invoices reflecting the
incorrect lot(s) purchased and/or final
bid amount(s). As a result provision
should be made for candidates who did
not address a batch system and did not
include points 12, 12.1 and 12.2 in their
answers.
 Point 16 on the solution (access control)
would not address the particular
internal control weakness directly.
These were marked under both online and
manual registration.
Noted.
Point 20 in suggested solution was amended
to cover both Finding 2 and Finding 3.
Noted
Noted
Part 4 – 18 marks
Comment
No additional comments.
EXAMCOM response
Noted
Part 5 – 10 marks
Comment
This question tested various aspects in an
interesting way.
The question asked to evaluate each of
allegations listed for possible negligence. One
would therefor expect that the solution would
evaluate each allegation individually and make a
‘conclusion’ about possible negligence or not iro
each allegation. This is however not the case in
the suggested solution. We recommend that
the solution be adapted to evaluate and make a
conclusion about each allegation’s negligence
separately, as the required asked.
EXAMCOM response
The final mark for concluding on negligence
(point 7.1) was also awarded if a student
only concluded on the negligence of a
specific/single issue.
Specific Comments: Question 2
Comments on each subsection of the question should inter alia, address the following:
a) The appropriateness of the standard of assessment.
b) The extent to which the question content and information provided in the scenario is
unambiguous and appropriate to the requirements of the specific questions.
c) The extent to which the requirements of the questions are clearly and unambiguously stated
in the suggested solutions.
d) The appropriateness of the time allocation to each question.
e) The appropriateness of the allocation of marks as set out in the suggested solutions.
f) Any other relevant comments.
Question 2: Section A
Part 1 – 20 marks
Comment
This was a good and practical application
question that tested the candidates’
understanding of auditing, and in particular the
audit approach.
The question asked candidates to discuss the
impact of each finding and management
comment on the audit approach, with full
motivation of the candidate’s answer. One
would therefore expect that the answer also
includes an assessment on the effect of each
finding on the risk of material statement – at
EXAMCOM response
Noted
Noted
financial statement and/or account and
assertions level (mentioning the account(s) and
assertion(s) affected), where applicable. We
suggest that the solution and marks be adapted
to also include this as this would be part of the
motivation for the effect on the nature and
extent of the audit procedures.
Finding 1 (inadequate backups): Point 1.2 only
addresses the scenario from one side and
mentions what the effect would be unless there
is an indication that material financial data was
lost, or that it was due to a systemic weakness
in general controls. What if the results of the
audit procedures indicate data loss, or systemic
weakness in general controls? The solution
should be adapted to also include the effect of
these on the audit approach eg. could have
effect on going concern, etc.
With all findings where applicable, where there
is an indication of a weakness in general
controls, mentioning that reliance would then
not be placed on application controls, should be
added to the solution.
Mark plan amended
Addressed. See 1.1.2 in solution.
Part 2 – 17 marks
Comment
Although this question tested Financial
Accounting, this part of the question was
regarded as easy and candidates should not
have struggled with this part.
Regarding the ‘journal entry correct’ marks
allocated:
 Journal JE2 should be allocated 1 mark
for ‘journal entry correct’ due to the
fact that Retained earnings is one part
of the journal.
 Note that some candidates might have
combined journals JE3 and JE6 and that
both these marks should be awarded in
such instances.
EXAMCOM response
Noted
Marks allocated correctly for debiting and
crediting the correct accounts.
Taken into account during marking.
Part 3 – 19 marks
Comment
Candidates should not have struggled with this
question.
The topic tested is not a difficult topic.
However, the required was unclear as to on
which particular area candidates should have
focussed. In reading the required it could be
argued that candidates should (i) list all keys
matters that should be considered before the
count and (ii) only list the procedures relating to
consignment stock. An “Enter” should have
been inserted after the word “evidence” in the
second bullet to show that both parts of the
required relate to consignment stock.
From the solution it appears that the focus was
only on consignment stock.
The solution should perhaps be separated into
two parts: (i) key matters (ii) key procedures.
This would make it easier to mark.
EXAMCOM response
Noted
Noted, however Chemsave only has
consignment stock from Medimade and it is
only Medimade’s inventory that is being
considered.
Noted
Question 2: Section B
Part 4 – 14 marks
Comment
This question tested a basic topic (Inventory)
and gave it a nice twist with the inclusion of the
reliance on the Internal auditor’s work.
Consideration should be given to whether
additional procedures should be included in the
solution to confirm the valuation of
consignment stock.
EXAMCOM response
Noted
Mark plan amended
Part 5 – 17 marks
Comment
Although nice integration of subjects and topics,
candidates might have found the inclusion of
Financial Accounting and Management
Accounting ‘unexpected’.
EXAMCOM response
Noted
Financial Accounting was tested with from an
Noted
auditing perspective. The topic that was tested
was a difficult concept – even within pure
Financial Accounting. It is a concern that
candidates not employed in the manufacturing
industry might have been disadvantaged.
The Management Accounting calculations that
candidates had to do were however not
difficult.
Noted
We feel that although a very good question,
candidates would have experienced it a difficult.
Part 6 – 13 marks
Comment
Matter 1: This is also a very good question
testing the audit aspects relating to an IFRS5
misstatement. However, the area of accounting
that was tested is very technical.
EXAMCOM response
Noted
Matter 2: Consideration can be given to making
provision for additional marks for determining
whether a reportable irregularity exists and the
steps which should be taken.
Only the impact on audit report was required
and not steps to be taken if a RI exists.