SCHOOL OF ACCOUNTING, ECONOMICS AND FINANCE
MAIN EXAMINATION: 28 OCTOBER 2018
AUDITING 200 (ACCT 221)
INTERNAL EXAMINERS:
MR. S. MQADI and MS. N. MHLONGO
INTERNAL MODERATOR:
MR. B. NOMLALA
TOTAL: 100 MARKS DURATION: 180 MINUTES
INSTRUCTIONS TO CANDIDATES:
1. This paper consists of TWO questions. The scenarios are set out on pages 2 to 9 and
the required section on pages 10 to 12.
2. You have 30 minutes of reading time after which you will receive the required
section.
3. Use only blue or black ink. Do not write in pencil; pencil-written work will not be
marked.
4. Read the question thoroughly before attempting to answer it.
5. If you submit a blank (or empty) answer book, you are required to write on its cover:
“Blank book”.
6. Allocated marks and time are as follows:
Question Marks Minutes
Reading 30
Question 1 50 75
Question 2 50 75
Total 100 180
, AUDITING 200 (ACCT 221)
MAIN EXAMINATION: 28 OCTOBER 2019
Question one (50 marks: 75
minutes)
This question consists of three (separate/unrelated) parts (Part A, B & C)
A. Risk at financial statement level and response thereto:
You are the senior auditor on the audit of Sun-Pack Limited, a listed company on the JSE
who is the largest packaging manufacturer in Africa. The company has a 31 December
financial year-end and the financial statements are expected to be published on 24 January.
Your audit firm has been the auditors of Sun-Pack Limited for the last 3 years.
The following additional information has been brought to your attention during the
planning stage of the current year’s audit:
1. The executive directors and senior management of the company receive
performance bonuses. The bonuses are linked to the profits generated over the past
12 months.
2. The company is currently being investigated by SARS for non-compliance. It is
alleged that the company has contravened the transfer pricing regulations set out by
the above mentioned body by not always accounting for all transactions at the
correct values with connected parties located both inside and outside of South
Africa. Mr. Lewis, the chief financial officer has indicated that the claim made by
SARS is not correct and that they will realise that their initial assumptions were
inaccurate after conducting their investigation.
3. Mrs. Khumalo, the chief executive officer has indicated that they are not concerned
by the number of competitors popping up in the market. She indicated that several
competing companies have opened up in parts of Africa where Sun-Pack Limited
had been the sole packaging supplier for years. She feels that there was no real
concern as there is plenty of business to go around and believes that people will
soon realise that the quality of products provided by Sun-Pack Limited was of the
best available on the continent.
Mr. Van Zyk, the former chief financial officer was terminated from his position held at the
company in August, one month before the start of the interim audit. It was determined by
those charged with governance that he had given some of his relatives confidential
information about the company which, if used would result in them having an unfair
2
MAIN EXAMINATION: 28 OCTOBER 2018
AUDITING 200 (ACCT 221)
INTERNAL EXAMINERS:
MR. S. MQADI and MS. N. MHLONGO
INTERNAL MODERATOR:
MR. B. NOMLALA
TOTAL: 100 MARKS DURATION: 180 MINUTES
INSTRUCTIONS TO CANDIDATES:
1. This paper consists of TWO questions. The scenarios are set out on pages 2 to 9 and
the required section on pages 10 to 12.
2. You have 30 minutes of reading time after which you will receive the required
section.
3. Use only blue or black ink. Do not write in pencil; pencil-written work will not be
marked.
4. Read the question thoroughly before attempting to answer it.
5. If you submit a blank (or empty) answer book, you are required to write on its cover:
“Blank book”.
6. Allocated marks and time are as follows:
Question Marks Minutes
Reading 30
Question 1 50 75
Question 2 50 75
Total 100 180
, AUDITING 200 (ACCT 221)
MAIN EXAMINATION: 28 OCTOBER 2019
Question one (50 marks: 75
minutes)
This question consists of three (separate/unrelated) parts (Part A, B & C)
A. Risk at financial statement level and response thereto:
You are the senior auditor on the audit of Sun-Pack Limited, a listed company on the JSE
who is the largest packaging manufacturer in Africa. The company has a 31 December
financial year-end and the financial statements are expected to be published on 24 January.
Your audit firm has been the auditors of Sun-Pack Limited for the last 3 years.
The following additional information has been brought to your attention during the
planning stage of the current year’s audit:
1. The executive directors and senior management of the company receive
performance bonuses. The bonuses are linked to the profits generated over the past
12 months.
2. The company is currently being investigated by SARS for non-compliance. It is
alleged that the company has contravened the transfer pricing regulations set out by
the above mentioned body by not always accounting for all transactions at the
correct values with connected parties located both inside and outside of South
Africa. Mr. Lewis, the chief financial officer has indicated that the claim made by
SARS is not correct and that they will realise that their initial assumptions were
inaccurate after conducting their investigation.
3. Mrs. Khumalo, the chief executive officer has indicated that they are not concerned
by the number of competitors popping up in the market. She indicated that several
competing companies have opened up in parts of Africa where Sun-Pack Limited
had been the sole packaging supplier for years. She feels that there was no real
concern as there is plenty of business to go around and believes that people will
soon realise that the quality of products provided by Sun-Pack Limited was of the
best available on the continent.
Mr. Van Zyk, the former chief financial officer was terminated from his position held at the
company in August, one month before the start of the interim audit. It was determined by
those charged with governance that he had given some of his relatives confidential
information about the company which, if used would result in them having an unfair
2
