RE-EXAMINATION AUDITING 3B NOVEMBER 2017 UNIVERSITY OF ZULULAND RESTRUCTURED FOR RELEVANCE FACULTY OF COMMERCE, ADMINISTRATION AND LAW DEPARTMENT OF ACCOUNTING AND AUDITING Auditing 3B (CADD 302 and CAUD 302) November 2017 Re-examination Duration: 180 minutes Total marks: 120 Internal Examiner: Internal Moderator: Mr MC Gwala CA(SA) Mr JD Chambers CA(SA) External Moderator: Ms S West CA(SA) - UCT Instructions to candidates 1. This paper consists of one question (set out on pages 2 to 6). Ensure that your paper is complete. Question 1 120 marks 180 minutes Total 120 marks 180 minutes 2. Where more than one answer book has been used, clearly identify the sections answered on the cover of each answer book. 3. Fill in all the details as required on the front of each answer book handed in. 4. Use only blue or black ink. Do not write in pencil; pencil-written work will not be marked. 5. On completion, insert all answer books in numerical order under the cover of the answer book in which you commenced answering 6. Work neatly and logically. A maximum of 10% of the marks will be awarded for communication skills (language, clarity of style, presentation, logical and well- constructed answers). 7. In answering the questions, record any assumptions you may consider necessary. No questions will be answered by invigilators during the exam. 1
RE-EXAMINATION AUDITING 3B NOVEMBER 2017 Question 1 120 marks (180 minutes) You are a third year trainee auditor working for Ndlela & Co, a firm of auditors that has a presence nationwide. You work as an audit supervisor and are awaiting the sign-off of your training contract in December upon which you will qualify for registration as a Chartered Accountant (SA). You are currently busy on the audit of Amaqhathanzipho Holdings Limited ("AHL"), a large company that manufactures and distributes cleaning products. AHL is headquartered KwaMaphumulo, KwaZulu- Natal (KZN), where the manufacturing and distribution of its products to customers also takes place. Audit work on accounts payable During the planning stage of the AHL audit, the first year trainee (Hlengi) documented the accounts payable accounting and internal control system in use at AHL. This has been summarised in working paper "F1.1: Accounts payable system description" that has been placed on the audit file. Nalela CSG - Auditing through and through Client: AHL Prepared by: HN Date:23/10/2017 Year end: 31 October 2017 Reviewed by: MG Date:27/10/2017 Description: Accounts payable system description F1.1 1. Purchase orders are completed in triplicate and authorised by the Procurement Manager (Sandiswa). Authorised orders are distributed as follows: . The pink copy is sent to the Finance Clerk: Accounts Payable (Thobani). . The white copy remains in the order book, which is controlled by Nonjabulo at head office. · The green copy is sent to the supplier. 2. Upon receipt of an invoice from a supplier, Thobani matches the relevant order form to the invoice. He only processes the invoice once he has received confirmation of delivery from the manufacturing and distribution centre (MDC) buying