2AUD301 & 2AUT301 Auditing 3A First Semester 2021 Main Exam UNIVERSITY OF ZULULAND University of Zululand, Private Bag X1001, KwaDlangezwa, 3886 W: www.unizulu.ac.za FACULTY OF COMMERCE, ADMINISTRATION & LAW DEPARTMENT OF ACCOUNTING AND AUDITING EXAMINATION -FIRST SEMESTER 2021 2AU301 / 2AUD301 - AUDITING 3A DURATION: 3 HOURS 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 5 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. 1 ---
2AUD301 & 2AUT301 Auditing 3A First Semester 2021 Main Exam Question 1 [60 Marks: 90 Minutes] You are employed as a manager in the technical department at Udumo Incorporated, a medium sized audit firm. The following independent scenarios have been presented to you by the audit division for your input during the 20x20 financial year. Scenario 1 (40 Marks) Deep Impact Limited ("Deep Impact"), a well-established and JSE Listed company was founded in 2002. The company manufactures and distributes earth-moving equipment and a wide range of 'yellow machines9 ranging from tractors, excavators and cranes. The company is situated in South Africa but has branches across the Southern and Western African countries. The company has experienced a successful expansion over the past couple of years. Board Composition On its 2019 financial statements, the Board of Directors of Deep Impact consisted of: Mr Chambers- Board Chairperson and Chief Executive officer (also owns 6.5% of issued shares) Mr Brighton- Deputy CEO (Responsible for rest of Africa branches) Mr Khumalo- Chief Financial Officer Mr Moore- Non-executive director Mr Engelbrecht- Non-executive director Mr Cambridge- Independent non-executive director Ms Makwela- Independent non-executive director Mr Churchill- Independent non-executive director Half-way through 2019 financial year, Mr Marble resigned unexpectedly as Deep Impact9s CEO just after two years at the helm of the