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AUE2601 EXAM PACK
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AUE2601 EXAM PACK. 100% CORRECT questions, answers, workings and explanations. for assistance.
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AUE2601EXAM PACK
,Contents
HOW TO EARN MARKS ............................................................................................................................................. 20
Access Controls .......................................................................................................................................................... 22
Examples of tests of controls questions ...................................................................................................... 27
1. Board of directors ...................................................................................................................................... 30
Composition of the board ..................................................................................................................................... 30
What is an independent non-executive director? (Principle 2.18 (par 67), King Report) .................................... 30
2. Board committees .................................................................................................................................... 31
3. Governance of risk .................................................................................................................................... 33
4. Governance of Information Technology .................................................................................................... 33
5. Internal audit .................................................................................................................................... 33
6. Sustainability, integrated reporting and disclosure .......................................................................... 34
7. The link between governance principles and law .......................................................................... 35
Explanation ................................................................................................................................................ 37
Types & Examples .....................................................................................................................................37
Use and Application ...................................................................................................................................39
Purpose &Importance ................................................................................................................................40
Assertions assist auditors in considering a wide range of issues that are relevant to the authenticity of financial
statements. The consideration of management assertions during the Definition ...........................................40
Explanation .................................................................................................................................................. 40
Model .............................................................................................................................................................40
Components ...................................................................................................................................................40
Inherent Risk ................................................................................................................................................ 41
Control Risk ....................................................................................................................................................41
Detection Risk ................................................................................................................................................41
Application .....................................................................................................................................................42
Example ..........................................................................................................................................................42
How to Follow Risk Assessment Procedures in an Audit ...............................................................................43
Introduction ................................................................................................................................................... 45
Objective .........................................................................................................................................................45
Performing Risk Assessment Procedures .....................................................................................................45
,Obtaining an Understanding of the Company and Its Environment .........................................................46
Industry, Regulatory, and Other External Factors .................................................................................46
Nature of the Company ..............................................................................................................................46
Selection and Application of Accounting Principles, Including Related Disclosures ..........................48
Company Objectives, Strategies, and Related Business Risks ................................................................48
Company Performance Measures ............................................................................................................. 49
Obtaining an Understanding of Internal Control Over Financial Reporting ...........................................50
Control Environment .................................................................................................................................. 51
The Company's Risk Assessment Process ............................................................................................... 52
Information and Communication ............................................................................................................ 52
Control Activities .......................................................................................................................................53
Monitoring of Controls ............................................................................................................................. 53
Performing Walkthroughs ........................................................................................................................54
Relationship of Understanding of Internal Control to Tests of Controls ............................................54
Considering Information from the Client Acceptance and Retention Evaluation, Audit Planning Activities,
Past Audits, and Other Engagements ......................................................................................................... 55
Performing Analytical Procedures ...............................................................................................................55
Conducting a Discussion among Engagement Team Members Regarding Risks of Material Misstatement
...................................................................................................................................................................... 56
Discussion of the Potential for Material Misstatement Due to Fraud ...................................................57
Inquiring of the Audit Committee, Management, and Others within the Company about the Risks of
Material Misstatement .................................................................................................................................. 57
Inquiries Regarding Fraud Risks .............................................................................................................58
Identifying and Assessing the Risks of Material Misstatement .................................................................60
Identifying Significant Accounts and Disclosures and Their Relevant Assertions .............................60
Factors Relevant to Identifying Fraud Risks .......................................................................................... 61
Factors Relevant to Identifying Significant Risks ...................................................................................62
Further Consideration of Controls .......................................................................................................... 63
Audit process - risk assessment ................................................................................................................. 63
Audit process - risk response ......................................................................................................................63
Audit process - reporting ............................................................................................................................ 64
Audit process - what is an audit in the public sector? ...............................................................................64
Audit process - what does an audit not do? ................................................................................................64
Audit process - what is a clean audit? .......................................................................................................64
, Audit process - how to achieve a clean audit .......................................................................................................65
Audit, independence, regulations, and business services ................................................................................66
Corporate Mission ...........................................................................................................................................67
Vision ................................................................................................................................................................67
Objectives .........................................................................................................................................................67
Values............................................................................................................................................................... 68
Key Success factors ..........................................................................................................................................68
FEEDBACK FROM PREVIOUS PAST EXAM PAPERS ..................................................................................................69
MAY/JUNE 2011 EXAM PACK .............................................................................................................................. 69
MAY/JUNE 2012 EXAM PACK .............................................................................................................................. 72
OCTOBER / NOVEMBER 2012 EXAM PACK ........................................................................................................... 76
MAY/JUNE 2014 EXAM PACK ............................................................................................................................... 79
MAY/JUNE 2013 XAM PACK ................................................................................................................................. 84
OCTOBER / NOVEMBER 2013 ................................................................................................................................ 87
Question papers are attached on separate sheets, and some are
also accessible on myunisa.
STUDY NOTES
Introduction
Students often ask where internal control and controls in a computerised environment fit into the audit
process.
In terms of ISA 315 (par 5 and 6), auditors are required to perform risk assessment procedures. These
procedures are performed to obtain an understanding of the entity and its environment (including
internal control) sufficient to identify and assess risks of material misstatement, whether due to fraud
or error.
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