lOMoAR cPSD| 32110785
, lOMoAR cPSD| 32110785
COLLEGE OF ACCOUNTING SCIENCES
DEPARTMENT OF AUDITING
TEST 1: 24 APRIL 2024 AUE3761
THE AUDIT PROCESS
(40 marks)
2 hours (including 15 minutes to download and 30 minutes to upload)
THIS PAPER CONSISTS OF SEVEN (7) PAGES.
IMPORTANT INSTRUCTIONS:
1. This is a closed-book test.
2. This paper consists of a case study and five (5) questions.
3. All questions and subsections must be answered.
4. Each question must be started on a new (separate) page.
Honesty declaration:
By submitting my solution to the test, I declare that
• I know what plagiarism is, acknowledge that it is wrong and realise that disciplinary steps may be
taken against me if I am found guilty of plagiarism • this solution, submitted by myself, is my
own work
• I have not assisted any other student in any manner, nor have I received the assistance of any other
person in completing this test
• I know that if I am found to be in violation of this declaration, I will receive 0% for this test
Note: You do not have to sign this declaration since by submitting your solution, you automatically declare
that you adhere to all the above with regard to this specific assessment.
FURTHER INSTRUCTIONS:
1. Refer to Test 1 communication on myUnisa or myExams which provides more detail about the 2024 Test
1.
, This paper deals with the following main topics:
REQUIRED MAIN TOPIC MARKS
1. Statutory concerns 6
2. Risks of material misstatement at the financial statement level 11
3. Risks of material misstatement at the assertion level 7
4. Overall audit strategy 10
5. Ethical concerns 6
40
[THE CASE STUDY FOLLOWS ON THE NEXT PAGE.]
, lOMoAR cPSD| 32110785
CASE STUDY 40 marks
READ THE "REQUIRED" PART ON PAGE 7 BEFORE YOU CONTINUE.
BACKGROUND INFORMATION
You are a trainee accountant at SBG Incorporated (SBG) in Gauteng, a registered firm of auditors. SBG
has offices all over the country and is responsible for the audit of BuyRite Holdings Limited (BRH) and
its subsidiaries’ financial statements for the financial year ended 28 February 2023. BRH is an investment
holdings company listed on the Johannesburg Stock Exchange (JSE Limited) in the food retailers and
wholesalers sector and it has been a client of SBG for the past five financial years. The following are the
subsidiaries in the BRH Group, all of which trade with one another at normal market prices:
• BuyRite Retail (Pty) Ltd (BR Retail). It offers a broad range of retail products to customers in
supermarkets in South Africa.
• BuyRite Retail Non-RSA (Pty) Ltd. It offers a broad range of retail products to customers in
supermarkets outside of South Africa.
BRH and its subsidiaries prepare their financial statements in South African rand, in accordance with
International Financial Reporting Standards (IFRS), on the basis that it will continue as a going concern
for the foreseeable future. Stores that form part of each subsidiary are not franchised and therefore not
individually managed; they must comply with all decisions, internal controls and quality requirements as
set out by management.
You are part of the audit team responsible for the audit of BR Retail at their head office in Gauteng. Mr
Marole oversees the audit and he has been the engagement partner on BR Retail’s audit since SBG was
appointed as their auditors. Mrs Martin, who is also a CA(SA), has recently joined SBG as a partner and
has shown some interest in being appointed as the engagement partner on BR Retail’s audit. She will be
useful on the audit as she has valuable practical knowledge and experience since she was the chief
financial officer (CFO) of BR Retail until four years ago. Both Mr Marole and Mrs Martin are
independent from BR Retail.
There are different audit teams within SBG that are responsible for the audits of the companies in the
BRH group; therefore, various planning, execution and completion discussions will be held between
them. In line with the previous year’s audit, materiality is calculated as 5% of profit before income tax,
and all the companies within the group will be audited following the same audit approach.
During a meeting with the engagement team and management of BR Retail, the following results were
highlighted, indicating a challenging but successful 2023 financial year:
, lOMoAR cPSD| 32110785
COLLEGE OF ACCOUNTING SCIENCES
DEPARTMENT OF AUDITING
TEST 1: 24 APRIL 2024 AUE3761
THE AUDIT PROCESS
(40 marks)
2 hours (including 15 minutes to download and 30 minutes to upload)
THIS PAPER CONSISTS OF SEVEN (7) PAGES.
IMPORTANT INSTRUCTIONS:
1. This is a closed-book test.
2. This paper consists of a case study and five (5) questions.
3. All questions and subsections must be answered.
4. Each question must be started on a new (separate) page.
Honesty declaration:
By submitting my solution to the test, I declare that
• I know what plagiarism is, acknowledge that it is wrong and realise that disciplinary steps may be
taken against me if I am found guilty of plagiarism • this solution, submitted by myself, is my
own work
• I have not assisted any other student in any manner, nor have I received the assistance of any other
person in completing this test
• I know that if I am found to be in violation of this declaration, I will receive 0% for this test
Note: You do not have to sign this declaration since by submitting your solution, you automatically declare
that you adhere to all the above with regard to this specific assessment.
FURTHER INSTRUCTIONS:
1. Refer to Test 1 communication on myUnisa or myExams which provides more detail about the 2024 Test
1.
, This paper deals with the following main topics:
REQUIRED MAIN TOPIC MARKS
1. Statutory concerns 6
2. Risks of material misstatement at the financial statement level 11
3. Risks of material misstatement at the assertion level 7
4. Overall audit strategy 10
5. Ethical concerns 6
40
[THE CASE STUDY FOLLOWS ON THE NEXT PAGE.]
, lOMoAR cPSD| 32110785
CASE STUDY 40 marks
READ THE "REQUIRED" PART ON PAGE 7 BEFORE YOU CONTINUE.
BACKGROUND INFORMATION
You are a trainee accountant at SBG Incorporated (SBG) in Gauteng, a registered firm of auditors. SBG
has offices all over the country and is responsible for the audit of BuyRite Holdings Limited (BRH) and
its subsidiaries’ financial statements for the financial year ended 28 February 2023. BRH is an investment
holdings company listed on the Johannesburg Stock Exchange (JSE Limited) in the food retailers and
wholesalers sector and it has been a client of SBG for the past five financial years. The following are the
subsidiaries in the BRH Group, all of which trade with one another at normal market prices:
• BuyRite Retail (Pty) Ltd (BR Retail). It offers a broad range of retail products to customers in
supermarkets in South Africa.
• BuyRite Retail Non-RSA (Pty) Ltd. It offers a broad range of retail products to customers in
supermarkets outside of South Africa.
BRH and its subsidiaries prepare their financial statements in South African rand, in accordance with
International Financial Reporting Standards (IFRS), on the basis that it will continue as a going concern
for the foreseeable future. Stores that form part of each subsidiary are not franchised and therefore not
individually managed; they must comply with all decisions, internal controls and quality requirements as
set out by management.
You are part of the audit team responsible for the audit of BR Retail at their head office in Gauteng. Mr
Marole oversees the audit and he has been the engagement partner on BR Retail’s audit since SBG was
appointed as their auditors. Mrs Martin, who is also a CA(SA), has recently joined SBG as a partner and
has shown some interest in being appointed as the engagement partner on BR Retail’s audit. She will be
useful on the audit as she has valuable practical knowledge and experience since she was the chief
financial officer (CFO) of BR Retail until four years ago. Both Mr Marole and Mrs Martin are
independent from BR Retail.
There are different audit teams within SBG that are responsible for the audits of the companies in the
BRH group; therefore, various planning, execution and completion discussions will be held between
them. In line with the previous year’s audit, materiality is calculated as 5% of profit before income tax,
and all the companies within the group will be audited following the same audit approach.
During a meeting with the engagement team and management of BR Retail, the following results were
highlighted, indicating a challenging but successful 2023 financial year:
