University of Zululand, Private Bag X1001, KwaDlangezwa, 3886 W: www.unizulu.ac.za LIGENTIA CR UNIVERSITY OF ZULULAND FACULTY OF COMMERCE, ADMINISTRATION AND LAW DEPARTMENT OF ACCOUNTING AND AUDITING AUDITING 3B CADD 302 CAUD 302 Test 1 - December 2020 ACTIVITY Downloading and reading the scenario 15 Min 11:00 11:15 Writing time 60 Min 11:15 12:15 Submission time* 45 MIN 12:15 13:00 Additional submission grace time ** 60 MIN 13:00 14:00 MINUTES START Internal Examiner: Mr XE Mthimkhulu Internal Moderator: Mr MC Gwala CA(SA) FINISH * You must stop writing at 12:15 in order to be able to submit on time. You must allow yourself enough time to upload your submission as no exceptions will be made for late assessments. ** Extra time has been granted for any unforeseeable circumstances and events to ensure that all students are able to submit their attempts on Moodle. Please note that a penalty of up to 5 marks may be applied for submissions received during this time, after which all submissions received will be graded "0". Please ensure that the academic integrity of our course, programme and university are not compromised by not conducting yourself in an unbecoming manner during this assessment. Page 1 of 6
40 marks QUESTION 1 Background information You are an audit senior at Mayime Incorporated (Mayime). You have been assigned to the audit of Home and House Ltd (Home & House) for the year ended 31 December 2020. Home & House is listed on the JSE. This is the second year that Mayime is responsible for the audit of Home & House, the financial statements are required by Directors before 31 January 2021 as they will be used to obtain funding from ABBA Bank. The first Home & House store opened its doors in 1985 in Germiston, where after the company continued to grow and prosper. Another 29 stores have since opened in all the major provinces in South Africa. The head office and central warehouse of Home & House is located in Garsfontein, Pretoria. Home & House sells furniture (home, office and outdoor), homeware appliances, audio video equipment and carpets. Customers can place orders telephonically, via e-mail (see WP 100-1) or purchase goods in store. Home & House also identified the need to sell their products directly to customers via an online order system. The company implemented the system in the financial year under audit. The board of Home & House decided that customers will still be able to order telephonically, via e-mail or purchase goods in store in addition to the new online order system. The first year trainee accountant, Hazel, has detailed the online order systems description in WP 100-2, but requires some assistance in formulating the tests of controls for the controls in the process. The following working papers form part of the audit file for the year ended 31 December 2020: Working paper reference Descriptions WP 100 - 1 Online order process system description WO 100- 02 Lead Schedule : Trade Receivable Page 2 of 6