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AUE2601 Assignment 5 Semester 2 2024 All Questions are Covered
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AUE2601 Assignment 5 Semester 2 2024 All Questions AND ANSWERS
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AUE2601 ASSESSMENT 5 2024 S2Started on Thursday, 7 November 2024, 9:14 AM
State Finished
Completed on Thursday, 7 November 2024, 10:25 AM
Time taken 1 hour 11 mins
Grade 57.33 out of 60.00 (96%)
Question 1
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Which one of the following statements regarding a system of internal controls is correct in
terms of International Audit Standards?
Select one:
a.
The auditor is required to obtain an understanding of all the internal controls of the audit
client.
b.
Internal controls are designed, implemented, and maintained by management to promote
the reliability of financial reporting, the effectiveness and efficiency of operations and
compliance with applicable laws and regulations.
c.
Effective internal controls provide an entity with absolute assurance about achieving the
entity’s financial reporting objectives.
d.
The components of a system of internal control consist of the control environment, the
entity’s information system and communication, the auditor’s risk assessment process,
control activities and the process to monitor the system of internal control.
Question 2
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, AUE2601 ASSESSMENT 5 2024 S2
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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?
Select one:
a.
The review procedures must be aimed at providing reasonable assurance that revenue is not
materially misstated.
b.
The review procedures must be aimed at obtaining absolute 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 may include some substantive tests of detail even though this is not
an audit engagement.
Question 3
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, AUE2601 ASSESSMENT 5 2024 S2
SNJ Inc (SNJ) was recently approached by Logistix (Pty) Ltd (Logistix) to provide audit
services. Logistix is a logistics company that focuses mainly on importing and exporting. The
financial statements of Logistix are prepared in accordance with International Financial
Reporting Standards (IFRSs). SNJ has never audited a logistics company before but the audit
partner has confirmed that SNJ has access to adequate resources and competence to
perform the audit.
The directors of Logistix have indicated that they understand their responsibilities regarding
the internal controls but they expect SNJ to take full responsibility for the correct
preparation of the financial statements by performing a thorough audit of those financial
statements. The previous auditors resigned because the financial director had offered the
audit partner a US$1 000 000 offshore account on condition that no adverse findings were
made during the audit.
Which one of the following statements is correct regarding the factors that must be
considered before accepting Logistix as a new audit client?
Select one:
a.
SNJ does not have any reason to believe that Logistix lacks integrity.
b.
The two preconditions for an audit have been met, therefore SNJ can accept Logistix as an
audit client.
c.
SNJ cannot accept Logistix as an audit client because not all of the preconditions of the
audit have been met.
d.
SNJ can comply with all ethical requirements on the audit of Logistix.
Question 4
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