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AUE3702 EXAM PACK
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TABLE OF CONTENTS
JUNE 2013-2017
NOV 2013-2017
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AUE3702 2013 S1 – QUESTION (UNISA)
You are the audit manager for the 2013 audit of Tiger Trailers (Pty) Limited, a manufacturer of standard light
duty trailers. Their financial year end is 28 February and they have been your client for four years. The
manufacturing process of trailers is not a complex process and can be easily understood by observing the
production process. The audit plan indicated no unusual risk of misstating inventory at the assertion level.
You attended the client’s annual inventory count and are satisfied with the counting procedures. You have a
copy of the final stock count sheets and you are satisfied that the descriptions and quantities provide a true
reflection of the inventory count at year end. The stock count sheets are computerised and reflect the following
information: product code with a description, quantity, cost price and selling price. The cost accountant
provided you with the costing records. Every trailer model has a blueprint with the exact specifications
(diagrams), product codes of raw materials used in the manufacturing process and costing. From this blueprint
the cost price of a trailer is determined and used on the inventory sheets.
Tiger Trailers (Pty) Limited employs a registered production engineer, Mike Evans, on a contractual basis. Evans
has been a contract worker for five years and is responsible for ensuring the accuracy of the blueprints and he
also certifies the stage of the work in progress. The cost accountant is responsible for costing the items.
Cost is determined on the first-in-first out (FIFO) basis. Direct costs of manufacturing and a proportion of
manufacturing overheads, based on normal operating capacity, are included in the cost of manufactured goods
Inventories at cost on 28 February 2013 R’000 2012 R’000
Finished goods 4 280 3 845
Work-in-progress (70% complete) 1 190 1 084
Raw materials 995 799
Journal entry: Credit Note Policy
Tiger Trailers (Pty) Limited accepts returns of goods sold and has a policy that makes provision relating to sales
before year-end. It is company policy to provide for 2% of the February sales.
The journal entry for this provision is:
28/2/1 Sales (Dr) R59 500.24
3 Provision for credit notes (Cr) R59 500.24
February sales credit note provision per policy document R2
975 012 x 2%
Subsequent events
On reviewing the previous year’s audit programme for subsequent events you noticed that the audit
procedures were either poorly formulated or incomplete. You plan to reformulate them so that the audit
trainee is able to understand exactly what he has to do when executing them. In preparing the audit trainee to
perform the subsequent events procedures you explained the accounting principles of subsequent events to
him.
Audit reporting issues
On completion of the audit the audit partner gave you the following schedule of issues that could affect the
audit report. He requested you to complete the following schedule:
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