AUE3761 Test 1 Solution
April 2023
AUE3761 Test 1
April 2023
SUGGESTED SOLUTION
Dear Student,
Carefully study the feedback we give you in the solution to Test 1.
Required 1: Statutory concerns relating to the appointment of the engagement MARKS
partner
References: Lesson 1.2; APA and Companies Act
1. Mr Marole may not be appointed as the engagement partner on the audit of BR Retail
as he would have been the engagement partner for more than five consecutive ^
years. (1½) (Section 92 of the Companies Act)
2. Mrs Martin, as a previous CFO of BR Retail, is disqualified to take over as the
engagement partner as she is not yet eligible to do so before another year has
passed (five years should lapse and she is only in year four) (1½) (Section 90 of ^
the Companies Act)
3. Although both Mr Marole and Mrs Martin:
• are registered with IRBA (they are partners at a registered firm of auditors) (1½)
^
(Section 90 of the Companies Act and Section 37 of APA),
• except for the issues identified in points 1 and 2 above no other independence ^
issues are identified (Section 90 of the Companies Act) (1½),
neither of them qualifies to be appointed as the engagement partner on BR Retail’s
audit. (1½) (If only one person is mentioned as not complying, award 1 mark only.) ^
4. It is therefore suggested that another partner in the audit firm takes on this
responsibility. (1½) ^
Available (6 x 1½ = 9) 9
Maximum 6
Comments
Take note of the following comments for the solution of Required 1:
• It was not clear whether or not students understood the term “statutory
requirements” as some students did not address the required in terms of the requirements
prescribed in the relevant Acts. To answer this required, students had to identify which
Acts should be complied with when appointing an engagement partner of an engagement.
1
April 2023
AUE3761 Test 1
April 2023
SUGGESTED SOLUTION
Dear Student,
Carefully study the feedback we give you in the solution to Test 1.
Required 1: Statutory concerns relating to the appointment of the engagement MARKS
partner
References: Lesson 1.2; APA and Companies Act
1. Mr Marole may not be appointed as the engagement partner on the audit of BR Retail
as he would have been the engagement partner for more than five consecutive ^
years. (1½) (Section 92 of the Companies Act)
2. Mrs Martin, as a previous CFO of BR Retail, is disqualified to take over as the
engagement partner as she is not yet eligible to do so before another year has
passed (five years should lapse and she is only in year four) (1½) (Section 90 of ^
the Companies Act)
3. Although both Mr Marole and Mrs Martin:
• are registered with IRBA (they are partners at a registered firm of auditors) (1½)
^
(Section 90 of the Companies Act and Section 37 of APA),
• except for the issues identified in points 1 and 2 above no other independence ^
issues are identified (Section 90 of the Companies Act) (1½),
neither of them qualifies to be appointed as the engagement partner on BR Retail’s
audit. (1½) (If only one person is mentioned as not complying, award 1 mark only.) ^
4. It is therefore suggested that another partner in the audit firm takes on this
responsibility. (1½) ^
Available (6 x 1½ = 9) 9
Maximum 6
Comments
Take note of the following comments for the solution of Required 1:
• It was not clear whether or not students understood the term “statutory
requirements” as some students did not address the required in terms of the requirements
prescribed in the relevant Acts. To answer this required, students had to identify which
Acts should be complied with when appointing an engagement partner of an engagement.
1
