AUE2601
EXAM PACK
, lOMoARcPSD|21997160
AUE2601
Written assessment 1
Instructions
Information about this assessment and special instructions for answering it.
(1) This assessment covers lessons 1 and 2 of the module.
(2) Solution should be typed and converted to a PDF document.
(3) Answer all the questions.
(4) Only selected questions might be marked.
Plagiarism
• Please refer to Unisa’s policy on plagiarism. Remember that your assessment must be your
own work.
• By submitting your assessment, you confirm that you will adhere to the terms of the
plagiarism declaration. Please note the following:
o If you are found to have violated the declaration, you will receive a mark of 0% for the
assessment.
o If your entire assessment or any part of it is found to be copied from someone else’s
work (including your tutor’s and your online study group’s work), both you and the
person(s) you copied from will receive a mark of 0%. Any assessments that look similar
or have similar wording will be considered a violation of the declaration.
This declaration requires you to complete your assessment on your own.
PLAGIARISM DECLARATION
By submitting AUE2601 written assessment, I declare that:
• I have read the Unisa Disciplinary Code for Students.
• I know what plagiarism is and realise that it is wrong. I am fully aware that
disciplinary steps may be taken against me if I am found guilty of plagiarism.
• This assessment, submitted by me, is my own work and I have referenced all the
sources I have used.
• I have not allowed any other student to copy my work.
• I have not made use of any artificial intelligence (AI) or other tool to help complete this
assessment.
• I understand that if I violate this declaration, I will receive a mark of 0% for this
assessment.
Please note: You do not have to submit the declaration. By submitting any AUE2601
assessment, you automatically declare that you adhere to all the above in the specific
assessment.
1
, lOMoARcPSD|21997160
SCENARIO 40 MARKS
Background information
You are a trainee accountant at the audit firm, Effective Audit Inc (Effective Audit). The firm was
appointed as the external auditor of Books & Things (Pty) Ltd (Books & Things) in 2019. The first
audit report issued by the audit partner was for the audit of the financial statements of Books &
Things for the year ended 30 June 2020.
Books & Things is a wholesaler of books and stationery with branches in many of the major cities
across South Africa. The company was founded in 2015 by Mr Ackers, a qualified CA(SA) and
Mrs Bolt, a retired book editor. They remain the only shareholders but are not directly involved in
the daily operations of the company. Mr Ackers and Mrs Bolt appointed two executive directors,
Mr Page, a qualified CA(SA), as the Chief Financial Officer; and Ms Word, also a qualified CA(SA),
as the Chief Operating Officer. Additionally, two non-executive directors were appointed: Mrs Pen,
Mr Page’s sister and Mr Copper, a dedicated novelist and publisher with no other connections to
Books & Things.
Books & Things is rapidly expanding and in the process of applying for an additional loan from the
bank to fund various aspects of the expansion. Mr Page requested Effective Audit to finalise the
audit engagement and audit report a month earlier than the audit deadline of the previous year,
so that they can submit the audited financial statements to the bank on time for consideration of
the loan. Furthermore, the rapid expansion required a migration from a partially complex
computerised accounting system to a fully complex one during the current financial year. However,
a fire broke out just before the migration, destroying various manual files (hard copies) of
accounting records that Books & Things kept alongside the partially complex computerised
system.
Financial information
The financial statements of Books & Things are prepared by the financial manager, Mr Fiction.
The following is an extract from Books & Things’ financial statements for the year ended 30 June
2024:
2024 2023
R’000 R’000
Revenue 29 654 26 435
Cost of sales 25 221 22 106
Payroll expenses(1) 9 852 8 654
Interest expense 1 556 1 856
Operating expenses(2) 1 678 1 231
Non-current liabilities
Loans from third parties 17 765 19 823
2
, lOMoARcPSD|21997160
Equity 13 289 11 045
Cash and cash equivalents 8 763 6 982
Note 1: The payroll expense includes all salary-related expenses for the 53 employees employed
by the company.
Note 2: Operating expenses include the audit fee. Mrs Page informed the audit partner that the
directors are disputing the audit fee for the current year’s audit and would like to schedule a
meeting to discuss it.
Ethical matters
James and Sally, two trainee accountants on the audit team, overheard a conversation in the
cafeteria between Ms Word and Mr Page. Mr Page admitted to Ms Word that he failed to submit
the company’s Value Added Tax (VAT) returns for the past two VAT periods, to the South African
Revenue Service (SARS) because he was on sick leave. He was not too concerned and
mentioned that he would submit the returns when he had time to catch up with all outstanding
tasks. Mr Page requested Ms Word to keep this information confidential, as he did not want Mr
Ackers to find out.
Over the weekend, the audit manager, Ms Growth (CA(SA)), was approached by the local financial
newspaper to comment on the financial situation of Books & Things. There are rumours that the
directors consider listing the company’s shares on the Johannesburg Securities Exchange (JSE).
The local newspaper offered Ms Growth a fee for this information.
Governance matters
The directors of Books & Things have started discussing potential candidates for the audit
committee, which will need to be established should they decide to list Books & Things’ shares on
the JSE.
The following candidates are being considered:
• Mr Copper
• Ms Word
• Mrs Pen
3
EXAM PACK
, lOMoARcPSD|21997160
AUE2601
Written assessment 1
Instructions
Information about this assessment and special instructions for answering it.
(1) This assessment covers lessons 1 and 2 of the module.
(2) Solution should be typed and converted to a PDF document.
(3) Answer all the questions.
(4) Only selected questions might be marked.
Plagiarism
• Please refer to Unisa’s policy on plagiarism. Remember that your assessment must be your
own work.
• By submitting your assessment, you confirm that you will adhere to the terms of the
plagiarism declaration. Please note the following:
o If you are found to have violated the declaration, you will receive a mark of 0% for the
assessment.
o If your entire assessment or any part of it is found to be copied from someone else’s
work (including your tutor’s and your online study group’s work), both you and the
person(s) you copied from will receive a mark of 0%. Any assessments that look similar
or have similar wording will be considered a violation of the declaration.
This declaration requires you to complete your assessment on your own.
PLAGIARISM DECLARATION
By submitting AUE2601 written assessment, I declare that:
• I have read the Unisa Disciplinary Code for Students.
• I know what plagiarism is and realise that it is wrong. I am fully aware that
disciplinary steps may be taken against me if I am found guilty of plagiarism.
• This assessment, submitted by me, is my own work and I have referenced all the
sources I have used.
• I have not allowed any other student to copy my work.
• I have not made use of any artificial intelligence (AI) or other tool to help complete this
assessment.
• I understand that if I violate this declaration, I will receive a mark of 0% for this
assessment.
Please note: You do not have to submit the declaration. By submitting any AUE2601
assessment, you automatically declare that you adhere to all the above in the specific
assessment.
1
, lOMoARcPSD|21997160
SCENARIO 40 MARKS
Background information
You are a trainee accountant at the audit firm, Effective Audit Inc (Effective Audit). The firm was
appointed as the external auditor of Books & Things (Pty) Ltd (Books & Things) in 2019. The first
audit report issued by the audit partner was for the audit of the financial statements of Books &
Things for the year ended 30 June 2020.
Books & Things is a wholesaler of books and stationery with branches in many of the major cities
across South Africa. The company was founded in 2015 by Mr Ackers, a qualified CA(SA) and
Mrs Bolt, a retired book editor. They remain the only shareholders but are not directly involved in
the daily operations of the company. Mr Ackers and Mrs Bolt appointed two executive directors,
Mr Page, a qualified CA(SA), as the Chief Financial Officer; and Ms Word, also a qualified CA(SA),
as the Chief Operating Officer. Additionally, two non-executive directors were appointed: Mrs Pen,
Mr Page’s sister and Mr Copper, a dedicated novelist and publisher with no other connections to
Books & Things.
Books & Things is rapidly expanding and in the process of applying for an additional loan from the
bank to fund various aspects of the expansion. Mr Page requested Effective Audit to finalise the
audit engagement and audit report a month earlier than the audit deadline of the previous year,
so that they can submit the audited financial statements to the bank on time for consideration of
the loan. Furthermore, the rapid expansion required a migration from a partially complex
computerised accounting system to a fully complex one during the current financial year. However,
a fire broke out just before the migration, destroying various manual files (hard copies) of
accounting records that Books & Things kept alongside the partially complex computerised
system.
Financial information
The financial statements of Books & Things are prepared by the financial manager, Mr Fiction.
The following is an extract from Books & Things’ financial statements for the year ended 30 June
2024:
2024 2023
R’000 R’000
Revenue 29 654 26 435
Cost of sales 25 221 22 106
Payroll expenses(1) 9 852 8 654
Interest expense 1 556 1 856
Operating expenses(2) 1 678 1 231
Non-current liabilities
Loans from third parties 17 765 19 823
2
, lOMoARcPSD|21997160
Equity 13 289 11 045
Cash and cash equivalents 8 763 6 982
Note 1: The payroll expense includes all salary-related expenses for the 53 employees employed
by the company.
Note 2: Operating expenses include the audit fee. Mrs Page informed the audit partner that the
directors are disputing the audit fee for the current year’s audit and would like to schedule a
meeting to discuss it.
Ethical matters
James and Sally, two trainee accountants on the audit team, overheard a conversation in the
cafeteria between Ms Word and Mr Page. Mr Page admitted to Ms Word that he failed to submit
the company’s Value Added Tax (VAT) returns for the past two VAT periods, to the South African
Revenue Service (SARS) because he was on sick leave. He was not too concerned and
mentioned that he would submit the returns when he had time to catch up with all outstanding
tasks. Mr Page requested Ms Word to keep this information confidential, as he did not want Mr
Ackers to find out.
Over the weekend, the audit manager, Ms Growth (CA(SA)), was approached by the local financial
newspaper to comment on the financial situation of Books & Things. There are rumours that the
directors consider listing the company’s shares on the Johannesburg Securities Exchange (JSE).
The local newspaper offered Ms Growth a fee for this information.
Governance matters
The directors of Books & Things have started discussing potential candidates for the audit
committee, which will need to be established should they decide to list Books & Things’ shares on
the JSE.
The following candidates are being considered:
• Mr Copper
• Ms Word
• Mrs Pen
3
