AUE2602 Summary and Notes 2022
i i i i
,Corporate Governance in Accountancy
i i i
AUE2602
UNISA
, Table iofiContents
TOPIC i1: iCORPORATE iGOVERNANCE iAND iSTATUTORY iMATTERS ..............................................4
: iTHE iBACKGROUND iOF iCORPORATE iGOVERNANCE iIN iSOUTH iAFRICA .......................................... 4
: iSTATUTORY iMATTERS .................................................................................................................. 6
: iSTANDARDS iOF iDIRECTORS iCONDUCT ................................................................................................................ 6
: iLIABILITY iOF iDIRECTORS iAND iPRESCRIBED iOFFICERS .......................................................................................... 7
: iINDEMNIFICATION iAND iDIRECTORS' iINSURANCE................................................................................................ 7
: iAUDIT iCOMMITTEES ........................................................................................................................................... 8
: iTHE iKING iIV iREPORT iON iGOVERNANCE iFOR iSOUTH iAFRICA ........................................................ 9
: i LEADERSHIP, iETHICS iAND iCORPORATE iCITIZENSHIP .......................................................................................... 9
: i STRATEGY, iPERFORMANCE iAND iREPORTING................................................................................................... 13
: i GOVERNANCE iSTRUCTURES iAND iDELEGATION ............................................................................................... 15
: i THE iGOVERNANCE iOF iRISK ............................................................................................................................. 18
: i THE iGOVERNANCE iOF iINFORMATION iTECHNOLOGY ....................................................................................... 20
: i COMPLIANCE iGOVERNANCE ........................................................................................................................... 22
: i THE iGOVERNANCE iOF iREMUNERATION .......................................................................................................... 22
: i ASSURANCE 25
: i THE iGOVERNANCE iOF iSTAKEHOLDER iRELATIONSHIPS..................................................................................... 28
: iCORPORATE iGOVERNANCE i– iINTERNATIONAL iDEVELOPMENTS ................................................ 29
: iSARBANES-OXLEY iACT ...................................................................................................................................... 29
TOPIC i2: iINTERNAL iCONTROL ...................................................................................................29
: iINTERNAL iCONTROL ................................................................................................................... 29
: iDEFINITION iOF iINTERNAL iCONTROL ................................................................................................................. 29
: iLIMITATIONS iOF iINTERNAL iCONTROL ............................................................................................................... 31
: iCOMPONENTS iOF iINTERNAL iCONTROL ...................................................................................... 31
: iCONTROL iENVIRONMENT ................................................................................................................................. 31
: iRISK iASSESSMENT ................................................................................................................. 32
: iINFORMAITON iSYSTEMS ................................................................................................................................... 33
: iCONTROL iACTIVITIES ........................................................................................................................................ 35
: iMONITORING iOF iCONTROLS............................................................................................................................. 37
: iSUMMARY iOF iCOMPONENTS iINTERNAL iCONTROL ........................................................................................... 38
: iCONTROLS iIN iA iCOMPUTERISED iENVIRONMENT ....................................................................... 39
: iGENERAL iCONTROLS ......................................................................................................................................... 39
: iAPPLICATION iCONTROLS .................................................................................................................................. 47
: iINTERNAL iCONTROL iFROM iTHE iPERSPECTIVE iOF iTHE iEXTERNAL iAUDITOR................................ 53
: iOBTAINING iAND iUNDERSTANDING iINTERNAL iCONTROL .................................................................................. 53
: iSIGNIFICANT iRISKS............................................................................................................................................ 56
TOPIC i3: iBUSINESS iCYCLES ........................................................................................................57
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, : iTHE iACCOUNTING iSYSTEM iAND iBUSINESS iCYCLES ..................................................................... 57
: iFINANCIAL iSTATEMENTS ............................................................................................................ 58
TOPIC i4: iREVENUE iAND iRECEIPTS iCYCLE ..................................................................................60
: iCREDIT iSALES .............................................................................................................................. 60
: iACTIVITIES iAND iFUNCTIONS iIN iTHE iCYCLE ........................................................................................................ 60
: iDOCUMENTS iUSED iIN iTHE iCYCLE ...................................................................................................................... 63
: iRISKS iAND iINTERNAL iCONTROL iIN iTHE iCYCLE ................................................................................................... 64
: iCOMPUTERISATION iIN iTHE iCYCLE ..................................................................................................................... 68
: iCASH iSALES................................................................................................................................. 70
: iSTAGES iOF iA iCASH iSALE.................................................................................................................................... 70
: iRISKS iAND iINTERNAL iCONTROL iOVER iA iCASH iSALE........................................................................................... 70
TOPIC i5: iACQUISITIONS iAND iPAYMENTS iCYCLE .......................................................................72
: iACTIVITIES iAND iFUNCTIONS iIN iTHE iCYCLE ................................................................................. 72
: iDOCUMENTS iUSED iIN iTHE iCYCLE................................................................................................ 73
: iRISKS iAND iINTERNAL iCONTROL iIN iTHE iCYCLE ............................................................................ 73
: iCOMPUTERISATION iIN iTHE iCYCLE .............................................................................................. 77
TOPIC i6: iINVENTORY iAND iPRODUCTION iCYCLE........................................................................79
: iACTIVITES iAND iFUNCTIONS iIN iTHE iCYCLE .................................................................................. 79
: iDOCUMENTS iUSED iIN iTHE iCYCLE................................................................................................ 80
: iRISKS iAND iINTERNAL iCONTROL iIN iWAREHOUSING .................................................................... 81
: iRISKS iAND iINTERNAL iCONROL iIN iPRODUCITON ......................................................................... 82
: iINVENTORY iCOUNTS .................................................................................................................. 84
: iCOMPUTERISATION iIN iTHE iCYCLE .............................................................................................. 87
: iINVENTORY iVALUATION iCONCEPTS ........................................................................................... 87
TOPIC i7: iPAYROLL iAND iPERSONNEL iCYCLE ...............................................................................88
: iACTIVITIES iAND iFUNCTIONS iIN iTHE iCYCLE ................................................................................. 89
: iDOCUMENTS iUSED iIN iTHE iCYCLE................................................................................................ 90
: iRISKS iAND iINTERNAL iCONTROL iIN iTHE iCYCLE ............................................................................ 91
: iCOMPUTERISAITON iOF iTHE iCYCLE ............................................................................................. 94
TOPIC i8: iFINANCE iAND iINVESTMENT iCYCLE .............................................................................97
: iCAPITAL iEXPENDITURE ............................................................................................................... 97
: iCHARACTERISTICS iOF iCAPITAL iEXPENDITURE.................................................................................................... 97
: iRISKS iAND iINTERNAL iCONTROL iFOR iCAPITAL iEXPENDITURE ............................................................................. 98
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i i i i
,Corporate Governance in Accountancy
i i i
AUE2602
UNISA
, Table iofiContents
TOPIC i1: iCORPORATE iGOVERNANCE iAND iSTATUTORY iMATTERS ..............................................4
: iTHE iBACKGROUND iOF iCORPORATE iGOVERNANCE iIN iSOUTH iAFRICA .......................................... 4
: iSTATUTORY iMATTERS .................................................................................................................. 6
: iSTANDARDS iOF iDIRECTORS iCONDUCT ................................................................................................................ 6
: iLIABILITY iOF iDIRECTORS iAND iPRESCRIBED iOFFICERS .......................................................................................... 7
: iINDEMNIFICATION iAND iDIRECTORS' iINSURANCE................................................................................................ 7
: iAUDIT iCOMMITTEES ........................................................................................................................................... 8
: iTHE iKING iIV iREPORT iON iGOVERNANCE iFOR iSOUTH iAFRICA ........................................................ 9
: i LEADERSHIP, iETHICS iAND iCORPORATE iCITIZENSHIP .......................................................................................... 9
: i STRATEGY, iPERFORMANCE iAND iREPORTING................................................................................................... 13
: i GOVERNANCE iSTRUCTURES iAND iDELEGATION ............................................................................................... 15
: i THE iGOVERNANCE iOF iRISK ............................................................................................................................. 18
: i THE iGOVERNANCE iOF iINFORMATION iTECHNOLOGY ....................................................................................... 20
: i COMPLIANCE iGOVERNANCE ........................................................................................................................... 22
: i THE iGOVERNANCE iOF iREMUNERATION .......................................................................................................... 22
: i ASSURANCE 25
: i THE iGOVERNANCE iOF iSTAKEHOLDER iRELATIONSHIPS..................................................................................... 28
: iCORPORATE iGOVERNANCE i– iINTERNATIONAL iDEVELOPMENTS ................................................ 29
: iSARBANES-OXLEY iACT ...................................................................................................................................... 29
TOPIC i2: iINTERNAL iCONTROL ...................................................................................................29
: iINTERNAL iCONTROL ................................................................................................................... 29
: iDEFINITION iOF iINTERNAL iCONTROL ................................................................................................................. 29
: iLIMITATIONS iOF iINTERNAL iCONTROL ............................................................................................................... 31
: iCOMPONENTS iOF iINTERNAL iCONTROL ...................................................................................... 31
: iCONTROL iENVIRONMENT ................................................................................................................................. 31
: iRISK iASSESSMENT ................................................................................................................. 32
: iINFORMAITON iSYSTEMS ................................................................................................................................... 33
: iCONTROL iACTIVITIES ........................................................................................................................................ 35
: iMONITORING iOF iCONTROLS............................................................................................................................. 37
: iSUMMARY iOF iCOMPONENTS iINTERNAL iCONTROL ........................................................................................... 38
: iCONTROLS iIN iA iCOMPUTERISED iENVIRONMENT ....................................................................... 39
: iGENERAL iCONTROLS ......................................................................................................................................... 39
: iAPPLICATION iCONTROLS .................................................................................................................................. 47
: iINTERNAL iCONTROL iFROM iTHE iPERSPECTIVE iOF iTHE iEXTERNAL iAUDITOR................................ 53
: iOBTAINING iAND iUNDERSTANDING iINTERNAL iCONTROL .................................................................................. 53
: iSIGNIFICANT iRISKS............................................................................................................................................ 56
TOPIC i3: iBUSINESS iCYCLES ........................................................................................................57
2
, : iTHE iACCOUNTING iSYSTEM iAND iBUSINESS iCYCLES ..................................................................... 57
: iFINANCIAL iSTATEMENTS ............................................................................................................ 58
TOPIC i4: iREVENUE iAND iRECEIPTS iCYCLE ..................................................................................60
: iCREDIT iSALES .............................................................................................................................. 60
: iACTIVITIES iAND iFUNCTIONS iIN iTHE iCYCLE ........................................................................................................ 60
: iDOCUMENTS iUSED iIN iTHE iCYCLE ...................................................................................................................... 63
: iRISKS iAND iINTERNAL iCONTROL iIN iTHE iCYCLE ................................................................................................... 64
: iCOMPUTERISATION iIN iTHE iCYCLE ..................................................................................................................... 68
: iCASH iSALES................................................................................................................................. 70
: iSTAGES iOF iA iCASH iSALE.................................................................................................................................... 70
: iRISKS iAND iINTERNAL iCONTROL iOVER iA iCASH iSALE........................................................................................... 70
TOPIC i5: iACQUISITIONS iAND iPAYMENTS iCYCLE .......................................................................72
: iACTIVITIES iAND iFUNCTIONS iIN iTHE iCYCLE ................................................................................. 72
: iDOCUMENTS iUSED iIN iTHE iCYCLE................................................................................................ 73
: iRISKS iAND iINTERNAL iCONTROL iIN iTHE iCYCLE ............................................................................ 73
: iCOMPUTERISATION iIN iTHE iCYCLE .............................................................................................. 77
TOPIC i6: iINVENTORY iAND iPRODUCTION iCYCLE........................................................................79
: iACTIVITES iAND iFUNCTIONS iIN iTHE iCYCLE .................................................................................. 79
: iDOCUMENTS iUSED iIN iTHE iCYCLE................................................................................................ 80
: iRISKS iAND iINTERNAL iCONTROL iIN iWAREHOUSING .................................................................... 81
: iRISKS iAND iINTERNAL iCONROL iIN iPRODUCITON ......................................................................... 82
: iINVENTORY iCOUNTS .................................................................................................................. 84
: iCOMPUTERISATION iIN iTHE iCYCLE .............................................................................................. 87
: iINVENTORY iVALUATION iCONCEPTS ........................................................................................... 87
TOPIC i7: iPAYROLL iAND iPERSONNEL iCYCLE ...............................................................................88
: iACTIVITIES iAND iFUNCTIONS iIN iTHE iCYCLE ................................................................................. 89
: iDOCUMENTS iUSED iIN iTHE iCYCLE................................................................................................ 90
: iRISKS iAND iINTERNAL iCONTROL iIN iTHE iCYCLE ............................................................................ 91
: iCOMPUTERISAITON iOF iTHE iCYCLE ............................................................................................. 94
TOPIC i8: iFINANCE iAND iINVESTMENT iCYCLE .............................................................................97
: iCAPITAL iEXPENDITURE ............................................................................................................... 97
: iCHARACTERISTICS iOF iCAPITAL iEXPENDITURE.................................................................................................... 97
: iRISKS iAND iINTERNAL iCONTROL iFOR iCAPITAL iEXPENDITURE ............................................................................. 98
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