Exam (elaborations)
AUE2601 Assignment 5 Semester 1 2024
- Institution
- University Of South Africa (Unisa)
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Dashboard CalendarDashboard / My courses / AUE2601-24-S1 / Welcome Message / Assessment 5
Assessment 5
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Attempts allowed: 2
This quiz opened at Wednesday, 22 May 2024, 8:00 AM
This quiz will close on Thursday, 23 May 2024, 11:00 PM.
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Time limit: 1 hour 40 mins
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Submitted Wednesday, 22 May 2024, 11:57 AM
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AUE2601-24-S1
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Dashboard / My courses / AUE2601-24-S1 / Welcome Message / Assessment 5
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Question 1
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The auditing firm RA Auditors would like to accept a new client engagement within the mining industry. They do not have any other
clients or experience within this industry. When determining whether to accept the client, the auditor must consider, amongst others,
the following criteria in terms of the International Standards of Quality Control 1 (ISQC 1). The following statements are possible
criteria:
1. The firm personnel have knowledge of the mining industry and related subject matter, including regulatory and reporting
requirements.
2. The firm have access to experts in the field, if required.
3. The firm have access to quality control reviewers who meet the criteria and eligibility requirements.
4. The firm is able to complete the engagement within the reporting deadline.
Choose the option that indicates correct criteria the auditor must consider when accepting the above-mentioned new client in the
mining industry in terms of ISQC 1:
Select one:
a. 2, 3 and 4
b. 1, 2, 3 and 4
c. 1, 2 and 4
d. 1, 2 and 3
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, Question 2
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The Companies Act of 2008 stipulates certain requirements pertaining to eligibility of individuals to be appointed to an audit
Dashboard / My courses / AUE2601-24-S1 / Welcome Message / Assessment 5
committee.
Choose the option/options that correctly describes/describe these requirements.
Note that there could be more than one correct option.
Select one or more:
a. A minimum of two members should be appointed to the audit committee.
b. All members of the audit committee should be independent and not involved in the day-to-day management of the company’s
business or have been so involved at any time during the previous financial year.
c. All members of the audit committee need to have appropriate qualifications and experience in finance specifically as the audit
committee is responsible for appointing the auditors.
d. All members of the audit committee should be directors of the company.
Question 3
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The following are possible procedures that form part of the “perform-the-engagement” stage of the review process in terms of
International Standards on Review Engagements (ISREs) which include the following:
1 determine materiality and obtain an understanding of the entity
2 design and perform inquiries from management and analytical procedures
3 reconcile the financial statements to the underlying accounting records
4 agree the terms of the engagement in the engagement letter
Choose the correct option that indicates the procedures that should be performed in terms of the ISREs.
Select one:
a. 1, 3 and 4
b. 1, 2, 3 and 4
c. 1, 2 and 3
d. 2, 3 and 4
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Question 4
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You are auditing the financial statements of Verico (Pty) Ltd for the financial reporting period ended 30 June 2019. Verico (Pty) Ltd
earned revenue of R60 million for the current financial period.
The audit manager has determined that planning materiality should be based on 1.5% of the revenue amount. Performance materiality
should be set at 75% of planning materiality. Aggregate uncorrected misstatements of R750 000 were discovered during the audit as a
whole.
Which one of the below alternatives correctly describes the correct impact of the misstatements on the audit report?
Select one:
a. Material misstatements found, do not issue an unmodified audit report.
b. No material misstatements found, issue an unmodified audit report.
c. Material misstatements found, issue an unmodified audit report.
d. No material misstatements found, issue a modified audit report.
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Question 5
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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. Effective internal controls provide an entity with absolute assurance about achieving the entity’s financial reporting objectives.
b. The auditor is required to obtain an understanding of all the internal controls of the audit client.
c. 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.
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.
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