Exam (elaborations)
Aue2601 assignment 6 semester 1 2023
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Started on Thursday, 15 June 2023, 9:54 AMState Finished
Completed on Thursday, 15 June 2023, 11:19 AM
Time taken 1 hour 25 mins
Grade 47.50 out of 60.00 (79%)
Question 1
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Question text
The different types of auditors are described below:
1 External auditors – auditors who express an
independent opinion on whether the annual financial
statements of a company, fairly present the financial
position and results of the company’s operations.
2 Government auditors – auditors who evaluate and
investigate the financial affairs of government
departments and report their findings to senior
government.
3 Forensic auditors – auditors who concentrate on
investigating and gathering evidence where there has
been alleged financial mismanagement, theft or fraud.
4 Special purpose auditors – auditors who specialise in a
particular field such as environmental auditors, who
audit compliance with environmental regulations, and
VAT auditors who work for the South African Revenue
Services and who audit vendors’ VAT returns.
, 5 Internal auditors – auditors employed by the company
who perform independent assignments on behalf of
the board of directors of the company relating to the
evaluation of the efficiency, economy and effectiveness
of the company’s internal control systems and business
activities.
Choose the option that indicates which types of auditors are
correctly described.
a.
1, 2, 3, 4 and 5.
b.
1, 2 and 3.
c.
1, 2, 3 and 4.
d.
2, 3, 4 and 5.
Question 2
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Yokohama (Pty) Ltd is a company that manufactures and sells
tyres for different types of vehicles. You are currently assigned to
the audit of Yokohama (Pty) Ltd for the financial reporting period
ended 30 June 2021.
The following risk factors have been identified by the audit senior
during the risk assessment process:
1. There is a risk of non-compliance with applicable laws and
regulations because tyre manufacturing companies are required
to adhere to strict environmental regulations.
2. There is a risk that the profits may be overstated in order to
increase management’s bonuses.
3. The internal controls of Yokohama (Pty) Ltd were not operating
effectively in the previous financial reporting period and
,management has confirmed that there has not been any changes
during the current reporting period.
Based on the above factors, what level of detection risk and
substantive procedures would be appropriate for this audit?
a.
low detection risk, more substantive procedures
b.
low detection risk, less substantive procedures
c.
high detection risk, less substantive procedures
d.
high detection risk, more substantive procedures
Question 3
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The audit firm where you are a candidate auditor, FPK Inc. has
recently been appointed to audit the financial statements of
Zebulon Ltd (Zebulon). The cash payments clerk of Zebulon Ltd
was dismissed during the year after admitting to making
payments to fictitious suppliers for his own benefit. Which one of
the options below is the most appropriate internal control activity
that can be implemented to prevent payments to fictitious
suppliers?
a.
Separation of responsibilities between the loading of suppliers on
the system, approval of supplier payments and processing of
supplier payments.
b.
Preparation of monthly bank reconciliations which are reviewed
and signed off by the financial accountant.
c.
, Strong physical access controls such as biometric systems and
CCTV cameras.
d.
Preparation of monthly debtors reconciliations which are reviewed
and signed off by the financial accountant.
Question 4
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Harry & Grant Inc, a registered firm of auditors in Johannesburg
was appointed to conduct an independent review of the financial
statements of Wukuwuku (Pty) Ltd.
A risk that revenue could be materially overstated was identified
as management bonuses are based on revenue.
Which one of the following statements is correct regarding the
independent review procedures for revenue?
a.
The review procedures may include some substantive tests of
detail even though this is not an audit engagement.
b.
The review procedures must be aimed at providing reasonable
assurance that revenue is not materially misstated.
c.
The review procedures cannot include any substantive tests of
detail as this is not an audit engagement.
d.
The review procedures must be aimed at obtaining absolute
assurance that revenue is not materially misstated.
Question 5
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