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 - SECOND SEMESTER 2020 CADD302 / CAUD302 - AUDITING 3 WRITING TIME: 3 HOURS FULL MARKS: 100 Internal examiner: Mr MC Gwala Internal moderator: Mr X Mthimkhulu External moderator: Ms Ropfiwa Sithubi (University of Cape Town) INSTRUCTIONS TO STUDENTS: 1. This paper consists of one question (with two parts to the required section, and is set out on pages 1 to 13 including 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 answer book. 3. Ensure that your scanned submissions are clear, easy to follow, complete and submitted in the correct place. 4. Complete your full details on the first page of your answer book and write your student number on each page submitted. Number each page submitted and state the total number of pages. 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. No questions will be answered by the lecturer during the exam. 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. No other references are allowed. Page 1 of 13
100 marks QUESTION 1 You are a trainee accountant at the audit firm Morvite & Pilchard Inc. ("M&P"). The firm provides a range of taxation, advisory and audit services to a wide spectrum of clients in the public and private sector. You are currently assigned to the audit of a new client, Tel C Limited Group, which comprises of Tel C Limited ("Tel C") and Tel Mobile. The audit partner responsible for the audit is Miss Zondwazintshaba Zondwa. The audit partner believes that information technology is an integral part of the audit process and therefore M&P uses the latest available audit software, where possible. The predecessor auditor provided M&P with the digital copy of last year's audit file. The following background and related information, as well as the working papers listed below, relate to the audit of the 31 December 2020 consolidated financial statements. Working paper A1.1 A1.2 Revenue system description (Prepaid airtime and data) A1.3 Revenue system description (Contract services) B2.2 Masterfile amendments C3.3 Inventory summary D4.4 Description Revenue system description (Overview) Going concern Background information Tel C Limited Group is a South African telecommunications company, which was established in 2004 by two former MTN employees, Derick Mathuba and Roger van Nicker. Tel