Exam (elaborations)
AUI3702 EXAM PACK 2024/2025
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- AUI3702
- Institution
- University Of South Africa
AUI3702 EXAM PACK 2024/2025
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lOMoARcPSD|47654148Downloaded by Tonnie Ochieng (tonnieochieng529@gmail.com)
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CONFIDENTIAL
Page 2 of 8 AUI3702
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Page 1 of 7 AUI3702
MAY/JUNE 2023
UNIVERSITY EXAMINATIONS
May/June 202 3
AUI3702
The Internal Audit Process: Test of Controls
100 marks
Two h ours
This question paper consists of seven pages.
INSTRUCTIONS
• The Invigilator o Keep your cell phone fully charged for the duration of the
assessment. o Log into The Invigilator app if you have not done so yet. Your cell
phone has to be connected to the internet to log in. o Scan the QR code given
below when the examination starts. If you encounter difficulty in scanning the QR
code, you can enter the QR access code indicated at the bottom of the QR code to
start the online invigilation.
o Once you have scanned the QR code, avoid any disturbances by putting your phone
on airplane/flight mode. No internet connection is needed during the assessment. o
Keep The Invigilator open at all times on your cell phone during the assessment.
o You may place your cell phone next to you. Your cell phone does not need to face
you, but it should be close enough so that you can hear the notifications from The
Invigilator. o The Invigilator will notify you when an action is required.
o To ensure that you can hear the notifications, do not put your cell phone on silent
mode and make sure that the media volume is turned up.
o When an action is required, a notification beep will be heard and an instruction will be
visible.
o Take note that once the examination time is over, you should first focus on scanning
your answer script and uploading it to the assessment platform. The uploading of
your script is time sensitive.
o Once you have uploaded your script to the assessment platform, you may switch on
the data on your cell phone to start the uploading process on The Invigilator.
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CONFIDENTIAL
Page 3 of 8 AUI3702
JANUARY/FEBRUARY 2021
o Good luck!
• The examination o Save a copy of the examination paper before your start
answering the questions. o Keep the honesty declaration in mind throughout this
examination session.
o Answer the questions in a handwritten or typed format on your computer, convert
your answer script to PDF and then upload the script to the assessment platform as a
PDF file.
o Write legibly and clearly and do not password-protect your PDF file. o A virus-
infected file will not be marked. o You may not submit your answer script by e-mail.
o Verify the file details before final submission.
CONFIDENTIAL
Question Main topic MARKS
1 Weakness and internal control 38
2 Internal control 20
3 Audit objectives and audit engagement procedures 21
4 Risk, analytical review procedures and audit engagement
procedures 21
100
Please note:
Although the primary purpose of the examination is to test the candidate’s knowledge of and
ability to apply the subject matter, the examiners will also consider the candidate’s ability to
organise and present such knowledge in acceptable written English.
QUESTION 1 38 MARKS
You are a senior internal auditor at Solar Lights Limited. The company sells and
manufactures various solar lights. All sales are on credit. Owing to your seniority and
work experience, you have been given the responsibility of supervising two internal
audits occurring at the same time. Both internal audit teams are experienced, and
you have worked with both teams before. You are currently reviewing the work that
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CONFIDENTIAL
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was done by each of the teams. The teams have listed the various internal control
activities.
Team A
Internal control activities identified over purchase, receipt, storage and the issue of
inventory items are as follows:
a) Raw materials, consisting mainly of high-value electronic items, are kept in a
store (raw material store), which is safeguarded against theft and damage. A
supervisor and four other storemen are employed in this store. They all
received proper training and are competent enough to perform their duties.
One of the storemen issues goods to production based on written or verbal
requests. (2)
b) Perpetual inventory records are not maintained. To compensate for this
limitation, the storemen perform a physical count every month. Proper control
activities are in place for these counts. (1)
c) On completion of the monthly count, the supervisor compares the inventory on
hand with the minimum reorder level. If the inventory level is below the order
level, he completes a requisition and forwards it to the purchasing department.
(2)
d) The purchasing clerk completes a purchase order and, after it has been
authorised, forwards it to the supplier from whom the previous purchase of the
item in question was made. The purchasing clerk is also responsible for the
payment of suppliers. (2)
e) Goods delivered are received by the storemen. No documentation is prepared
upon the receipt of goods. (2)
Team B
Internal control activities identified over credit sales are as follows:
f) After the availability of inventory has been confirmed, client orders are
completed in triplicate on the order forms by the sales representatives or the
sales clerk. The credit controller, the storeman and the delivery clerk each
receive a copy of every order. (2)
g) The credit controller evaluates each client’s outstanding balance and informs
the delivery clerk, by phone, whether delivery can be made. In the case of a
new client, the credit controller phones the person who placed the order and
based on the conversation, evaluates whether or not credit may be granted.
(2)
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