Exam (elaborations)
AUE3701 ASSIGNMENT 2 SEMESTER 1 OF 2022
- Institution
- University Of South Africa (Unisa)
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AUE3701 ASSIGNMENT 2 OF 2022 SEMESTER 1Question 1
Threats Safeguards
Familiarity Threat because (CEO) of Zo-Jo is the There should take another partner to be
sister to the audit partner in charge. CEO is responsible for Zo-Jo audit.
close family member to the partner in charge.
Zo-Jo stores increased from 20 to 40 while Audit team should be increased.
audit team members remain constant this leads
to intimidation threat since Audit incorporated
does not have enough capacity.
The trainee accountant assisted Zo-Jo with their Trainee accountants who assisted Zo-Jo with
accounting are the part of audit team. This their accounting should be removed from audit
leads to self-review threat because they are team.
accounting their work.
Audit partner agreed to consult Audit Audit Incorporate should not involved in the
Incorporate relating to preparation of tax preparation of tax return for Zo-Jo
returns for Zo-Jo. This leads to self-review treat
because Audit Incorporate is going to audit tax
return that they were involved in preparation.
Question 2
(a) Risk indicators b) Description of risk of material misstatement
at the financial statement level
Zo-Jo is listed on JSE Delisted due to noncompliance with JSE listing
requirements or due to failing to maintain a
certain profit level.
FOR ACCADEMIC NEEDS CONTACT INFO@UNITUTORIALS.CO.ZA/0651609781
, Comply with Consumer Protection Act 68 of Failure to comply with both acts lead to the
2009 and the Competition Act 89 of 1998. taking of trading certificate or Zo-Jo might be
sued.
GoMart planning to open 20 stores in South Increased competition leads to reduction in
Africa. prices and profits.
Auditors are given pressure by the CFO to finish Errors and misstatements might be not
audit early. detected by auditors due to tight deadline.
Shareholders promised to get dividend before Failure to get dividend the shareholder might
end of March 2022. sale their shares lead to decrease in share price.
Special dividend will be declared if the gross The financial statements might be manipulated
profit margin of 60% achieved in 2022. to receive gross profit margin of 60%.
Zo-Jo’s system are automated (computerized) The system might be hacked, and data might be
manipulated.
The system might be affected by virus.
The personnel in the finance department are This might be leads to errors in finance due to
new and inexperienced. lack of knowledge.
Question 3
The time and scope will increase due to the following.
Increased in number of stores to 40 number
Inexperienced personnel are being used in finance department.
Internal control is not working properly.
FOR ACCADEMIC NEEDS CONTACT INFO@UNITUTORIALS.CO.ZA/0651609781
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