AUE2601 ASS2 FOR SEMESTER 1 FOR 2021
Question One
1
1.1 This section states that an individual may be registered if the individual
has complied with the prescribed education, training and competency requirements
is resident in the Republic
is a fit and proper person to practice the profession
The Regulatory Board may not register an individual who
has at any time been removed from an office of trust because of misconduct related to carrying
out duties relating to that office
has been convicted and sentenced to imprisonment without the option of a fine, or to a fine
exceeding a prescribed limit in the Republic or elsewhere, for fraud, theft and forgery.
is for the time being, of unsound mind or unable to manage his own affairs
is disqualified from registration under a sanction imposed by the Auditing Profession Act, e.g.
for a disciplinary matter.
is an unrehabilitated insolvent
has entered into a compromise with creditors
has been provisionally sequestrated.
1.2
Revenue /Turnover
Third-party liabilities
Average number of employees
Number of shareholders or number individual who directly or indirectly has a beneficial interest
in any of the company’s securities.
1.3
Calculation of the public interest scores
2020 2019
Points Points
Turnover 21 20
Third party liabilities 13 11
FOR ACCADEMIC NEEDS CONTACT: 065 160 9781/ 1
, Shareholders 6 6
Average employees (120-1) 119 119
Total 159 156
Fantasy World must be audited.
Reasons:
Fantasy World public interest scores in 2020 were 159 points on the same time its financial
statements were internally compiled by the financial manager, Mr Jones. Furthermore, only one
shareholder (the CEO) is a director of the company.
2.1
It assists the auditor in identifying types of potential misstatement
It assists the auditor in identifying factors that affect the risks of material misstatement
It assists the auditor in designing the nature, timing and extent of further audit
procedures.
2.2
Management’s usual requirement that the cost of an internal control does not exceed the
expected benefits to be derived (cost/benefit).
Control may be sacrificed due to the cost of implementing the control, thus increasing the risk
that misstatement goes undetected. This is particularly so for smaller companies.
Most internal controls tend to be directed at routine transactions rather than non-routine
transactions.
The potential for human error due to carelessness, distraction, mistakes of judgement and the
misunderstanding of instructions.
The possibility of circumvention of internal controls through the collusion of a member of
management or an employee, with parties inside or outside the entity.
The possibility that a person responsible for exercising an internal control could abuse that
responsibility, for example, a member of management overriding an internal control.
2.3
No. Component of internal control
A The entity risk assessment process
B Control environment
C Control activities
D The information system and related business
processes, relevant to financial reporting.
3.1
FOR ACCADEMIC NEEDS CONTACT: 065 160 9781/ 2
Question One
1
1.1 This section states that an individual may be registered if the individual
has complied with the prescribed education, training and competency requirements
is resident in the Republic
is a fit and proper person to practice the profession
The Regulatory Board may not register an individual who
has at any time been removed from an office of trust because of misconduct related to carrying
out duties relating to that office
has been convicted and sentenced to imprisonment without the option of a fine, or to a fine
exceeding a prescribed limit in the Republic or elsewhere, for fraud, theft and forgery.
is for the time being, of unsound mind or unable to manage his own affairs
is disqualified from registration under a sanction imposed by the Auditing Profession Act, e.g.
for a disciplinary matter.
is an unrehabilitated insolvent
has entered into a compromise with creditors
has been provisionally sequestrated.
1.2
Revenue /Turnover
Third-party liabilities
Average number of employees
Number of shareholders or number individual who directly or indirectly has a beneficial interest
in any of the company’s securities.
1.3
Calculation of the public interest scores
2020 2019
Points Points
Turnover 21 20
Third party liabilities 13 11
FOR ACCADEMIC NEEDS CONTACT: 065 160 9781/ 1
, Shareholders 6 6
Average employees (120-1) 119 119
Total 159 156
Fantasy World must be audited.
Reasons:
Fantasy World public interest scores in 2020 were 159 points on the same time its financial
statements were internally compiled by the financial manager, Mr Jones. Furthermore, only one
shareholder (the CEO) is a director of the company.
2.1
It assists the auditor in identifying types of potential misstatement
It assists the auditor in identifying factors that affect the risks of material misstatement
It assists the auditor in designing the nature, timing and extent of further audit
procedures.
2.2
Management’s usual requirement that the cost of an internal control does not exceed the
expected benefits to be derived (cost/benefit).
Control may be sacrificed due to the cost of implementing the control, thus increasing the risk
that misstatement goes undetected. This is particularly so for smaller companies.
Most internal controls tend to be directed at routine transactions rather than non-routine
transactions.
The potential for human error due to carelessness, distraction, mistakes of judgement and the
misunderstanding of instructions.
The possibility of circumvention of internal controls through the collusion of a member of
management or an employee, with parties inside or outside the entity.
The possibility that a person responsible for exercising an internal control could abuse that
responsibility, for example, a member of management overriding an internal control.
2.3
No. Component of internal control
A The entity risk assessment process
B Control environment
C Control activities
D The information system and related business
processes, relevant to financial reporting.
3.1
FOR ACCADEMIC NEEDS CONTACT: 065 160 9781/ 2
