AUDITING 3B FINAL EXAM 2021 University of Zululand, Private Bag X1001, KwaDlangezwa, 3886 W: www.unizulu.ac.za UNIVERSITY OF ZULULAND FACULTY OF COMMERCE, ADMINISTRATION & LAW DEPARTMENT OF ACCOUNTING AND AUDITING EXAMINATION -08 NOVEMBER 2021 2AU302 / 2AUD302 - AUDITING 3B DURATION: 3 HOURS UPLOAD: 30 minutes FULL MARKS: 120 Internal examiner: Mr C. Mkhabela CA (SA) Internal moderator: Mr. I.N.T. Mthembu CA (SA) External moderator: Ms Y. Katekwe CA (SA) (University of Venda) INSTRUCTIONS TO STUDENTS: 1. This paper consists of two question (set out on pages 1 to 6 excluding this cover page). Ensure that your paper is complete. 2. Clearly separate the different sections of your answer and start every new (required) question on a new page of your script. 3. Your exam script should contain your name, surname and student number at the top of each page. 4. Ensure that before you submit your script on Moodle it is in a clearly readable format. 5. Use only blue or black ink. Do not write in pencil; pencil-written work will not be marked. 6. Working neatly and logically works to your advantage. Additionally, marks are awarded for pervasive skills (communication, language, writing style, clarity of expression, presentation, logical and well-constructed answers,). 7. In answering the questions, record any assumptions you may consider necessary. 8. Read the REQUIRED section properly, more than once and again while answering the question to ensure you provide an adequate and direct response. 9. This is an open book assessment and reference to the SAICA Student Handbook is allowed as per the SAICA open book policy. 10. By downloading this exam paper and actually uploading your attempt you agree to the University of Zululand's online assessment policies. Page 1 of 7 ---
AUDITING 3B FINAL EXAM 2021 Question 1 [85 Marks: 128 Minutes] CheninoBaby (Pty) Ltd, "Chenino", is a South African retailer of babies' product and children's clothing. The company was founded in 2003 by Mr Khosmo Diale CA(SA) and Mrs Lucy Diale who holds Marketing qualification and has a 30 September financial year end. The company's first shop was opened in Durban (Gateway) and has expanded since then to major cities of South Africa (Johannesburg and Cape Town). Chenino owes its growth and success to its unique business model, which relies on the parent's needs to buy premium and superior quality products for their babies. This led to Chenino offering quality baby strollers and car seats to higher income earners (Living Standards Measure - LSM 7 to 10). Following aggressive marketing and the growing middle class in South Africa, demand for their premium quality product grew overtime, solidifying the company's position in the market For the last 20 years, the company has imported most of its manufactured baby strollers from Wuhan Group ("Wuhan"), a company based in China. Wuhan manufactures baby and children's clothing for export and, due to lower manufacturing costs, has provided Chenino with a pricing advantage in the South African market. This cost advantage has however decreased in recent years because