AUE2602 Assignment 2A (COMPLETE ANSWERS) Semester 1 2024 (881128) - DUE 4 April 2024

AUE2602 Assignment 2A (COMPLETE ANSWERS) Semester 1 2024 (881128) - DUE 4 April 2024 ... 100 % TRUSTED workings, explanations and solutions. For assistance call or W.h.a.t.s.a.p.p us on +/ 2/ 5/ 4 /7 /7 /9 /5 /4 /0 /1 /3 /2 . PART A Question 1 You are a trainee accountant assigned to the audit of DataTech, a data service provider company listed on the JSE. You have been assigned to review whether DataTech complies with the King IV Report on Corporate Governance for South Africa 2016, specifically with regard to the composition and function of the audit committee. The following information has been provided to you by the engagement partner: DataTech held one audit committee meeting during the financial year ending on 28 February 2022. The audit committee consisted of three members: Mr Appleton, Miss Marks and Mrs Colt. Mr Appleton was the marketing director and the chairperson of the board. Miss Marks was the financial director and a retired CA(SA). Mrs Colt was an independent non-executive director with limited knowledge of IFRS, integrated reporting and internal controls. The position of chief executive auditor was vacant, and Miss Marks indicated that she would inform the audit committee that the board was in the process of appointing a chief audit executive. Miss Marks highlighted that the integrated reports for the previous two years were in process and that she would provide copies to the audit committee once they had been finalised and published. REQUIRED Identify six (6) corporate governance concerns in terms of the King IV Report on Corporate Governance for South Africa 2016 regarding the audit committee as evident from the information above and provide reasons for your answer. (15) Two presentation marks will be awarded if the answer is presented in the following format and for communication, logical reasoning and structure. (2) Concern 1 mark each Reason 1.5 marks each Max 6 Max 9 3 PART B 23 marks Question 1 17 marks Plastics (Pty) Ltd is a wholesaler of plastic items located in Johannesburg. The financial accountant, Ms Anna, has requested your advice about the weaknesses in the company’s revenue and receipts cycle. You observe the following: The company’s accounting system is partially computerised. Orders are received by the order clerk, Mrs Ivan, via email, but owing to time constraints all orders are not recorded and processed. The order forms are randomly numbered by the system. Once the order has been received, Mrs Ivan keys in the customer’s account number and a screen appears that indicates whether the customer has exceeded his/her credit limit. Mrs Ivan evaluates the customer’s credit limit and if the customer’s credit limit has been exceeded, the credit controller is requested to override the system to proceed with the sale. Mrs Ivan confirms the availability of inventory, and the order is routed to the accounting department. Thereafter, a picking slip is printed and submitted to Mr Nkosi, the despatch clerk. Mr Nkosi picks the inventory listed on the picking slip from the shelves and hands the inventory to the delivery person. REQUIRED Describe six (6) weaknesses in the revenue and receipts cycle of Plastics (Pty) Ltd and describe the effect of each weakness on the accuracy of the accounting records. (15) Two presentation marks will be awarded if the answer is presented in the following required format and for communication, logical reasoning and structure. (2) Weakness 1 mark each Control 1.5 marks each Max 6 Max 9 4 Question 2 6 marks You are the internal auditor of Cyber Star Limited (“Cyber”). Cyber uses a batch input system to process transactions in an integrated accounting system. During the audit of trade receivables and sales, you were assigned to perform walk-through tests on the trade receivables and sales application program for the year. The following errors were detected: (1) VAT was incorrectly calculated for several customers. (2) Customer account numbers included alphabetical characters. (3) The number of items purchased on three invoices was incorrectly reflected as 32. (4) The number of purchases allowed on the system is between one and 30 items. REQUIRED Explain the automated controls that should be in place for each item. (6)