FACULTY OF ECONOMIC AND FINANCIAL SCIENCES
DEPARTMENT COMMERCIAL ACCOUNTING
Subject: Auditing and Internal Control
Subject Code: AIC22A2 & AIC2AA2
Test: Test 2
Test date: 9 May 2016
Marks: 50 Marks
Duration: 1.5 Hour
Pages 4 (four) pages (including cover sheet)
No of questions 4 (four)
Examiner: D de Villiers; B Kuzwayo & K Modisagae
Internal moderator: J Mamaile
Information to students:
1. You are allowed to use a calculator.
2. An answer sheet/book will be supplied to you, in which you must write your answers in. If you
need another book/sheet, please ask the invigilator for another.
3. By writing this test and affixing your name and student number to the answer sheet/book, you
confirm that you are conversant with the test regulations of the University.
4. Use only a blue or a black pen to answer your questions. Answers given in pencil will not be
marked.
5. Make sure your handwriting is neat and easy to read. Set out your answer in a clear logical manner.
6. Use the same numbers for your answers as those used for the questions in the test/examination
paper.
7. Hand your answer book to the invigilator at the end of the examination.
, AIC22A2 – Test 2 - 2016
QUESTION 1 [10]
The IFAC Code of Professional Conduct provides detailed guidance on how a professional in public
practice and in business should conduct themselves. Below is a list of some of the expected
responsibilities set out by the IFAC Code of Professional Conduct for professional accountants in public
practice and in business.
a) The auditor should identify and evaluate situations where the interests of the audit firm may clash
with the interests of the client.
b) The professional accountant is expected to comply with fundamental principles despite: the gifts,
hospitality or preferential treatment that he/she gets from others within the company that is aimed
at encouraging him/her to act in an illegal or dishonest manner.
c) The auditor is required to charge fees in line with business norms, not as he/she likes.
d) An auditor is required to consider whether agreeing to have that client would threaten compliance
with the five (5) fundamental principles.
e) The accounting professional is expected to undertake or perform only those tasks for which he/she
has the necessary expertise/knowledge.
REQUIRED:
1.1 For each of the above expected responsibilities for an auditor or professional accountant identify
one threat and one safeguard. (10)
QUESTION 2 [15]
Corporate governance is the system or process by which companies are directed or controlled and it is
about companies being good corporate citizens and all that it entails. The Companies Act of 2008 is a
piece of legislation that ensures that companies act as “good corporate citizens.”
REQUIRED:
2.1 When must state owned companies appoint an external auditor in terms of Section 90 of the
Companies Act? (1)
2.2 Who does not qualify to be appointed as an external auditor in terms of Section 90 of the
Companies Act? (6)
2.3 Describe circumstances under which directors and prescribed officers may be held liable by the
company (Section 77 of the Companies Act). (8)
Page 2 of 4
DEPARTMENT COMMERCIAL ACCOUNTING
Subject: Auditing and Internal Control
Subject Code: AIC22A2 & AIC2AA2
Test: Test 2
Test date: 9 May 2016
Marks: 50 Marks
Duration: 1.5 Hour
Pages 4 (four) pages (including cover sheet)
No of questions 4 (four)
Examiner: D de Villiers; B Kuzwayo & K Modisagae
Internal moderator: J Mamaile
Information to students:
1. You are allowed to use a calculator.
2. An answer sheet/book will be supplied to you, in which you must write your answers in. If you
need another book/sheet, please ask the invigilator for another.
3. By writing this test and affixing your name and student number to the answer sheet/book, you
confirm that you are conversant with the test regulations of the University.
4. Use only a blue or a black pen to answer your questions. Answers given in pencil will not be
marked.
5. Make sure your handwriting is neat and easy to read. Set out your answer in a clear logical manner.
6. Use the same numbers for your answers as those used for the questions in the test/examination
paper.
7. Hand your answer book to the invigilator at the end of the examination.
, AIC22A2 – Test 2 - 2016
QUESTION 1 [10]
The IFAC Code of Professional Conduct provides detailed guidance on how a professional in public
practice and in business should conduct themselves. Below is a list of some of the expected
responsibilities set out by the IFAC Code of Professional Conduct for professional accountants in public
practice and in business.
a) The auditor should identify and evaluate situations where the interests of the audit firm may clash
with the interests of the client.
b) The professional accountant is expected to comply with fundamental principles despite: the gifts,
hospitality or preferential treatment that he/she gets from others within the company that is aimed
at encouraging him/her to act in an illegal or dishonest manner.
c) The auditor is required to charge fees in line with business norms, not as he/she likes.
d) An auditor is required to consider whether agreeing to have that client would threaten compliance
with the five (5) fundamental principles.
e) The accounting professional is expected to undertake or perform only those tasks for which he/she
has the necessary expertise/knowledge.
REQUIRED:
1.1 For each of the above expected responsibilities for an auditor or professional accountant identify
one threat and one safeguard. (10)
QUESTION 2 [15]
Corporate governance is the system or process by which companies are directed or controlled and it is
about companies being good corporate citizens and all that it entails. The Companies Act of 2008 is a
piece of legislation that ensures that companies act as “good corporate citizens.”
REQUIRED:
2.1 When must state owned companies appoint an external auditor in terms of Section 90 of the
Companies Act? (1)
2.2 Who does not qualify to be appointed as an external auditor in terms of Section 90 of the
Companies Act? (6)
2.3 Describe circumstances under which directors and prescribed officers may be held liable by the
company (Section 77 of the Companies Act). (8)
Page 2 of 4
