AUDITING 1A – AUA 3751 (TEST 1) - 9/03/2016

Duration: 54 minutes, Marks: 30 marks

QUESTION 1 (23 marks)

PART A (11 marks)

The audit client of an audit firm gave the firm 5 million to be entrusted to monitor the
1.1 cash of a Trust. Enquiries were made as to the source of the funds - with the following
outcome:
(a) The CA (Chartered Accountant) has reason to believe the client is laundering
money through the Trust
(b) The CA has no reason to believe it is from illegal activities.

YOU ARE REQUIRED TO, for each scenario given:

a) Indicate whether the threat is significant? (1 per scenario at 0.5 each– 1 marks)
b) State the fundamental principle that is threatened (1 per scenario – 4 marks)
c) Indicate the type of threat that would apply (1 per scenario – 2 marks)
d) State ONLY 2 RELEVANT safeguards for each scenario (2 per scenario – 4 marks)

PART B (12 marks)

(a) (2 marks)
First Finance Ltd is a listed company that has a number of subsidiaries and operates as a
Banking institution.
One of its subsidiaries requested a Loan from First Finance Ltd for the purpose of acquiring
the shares in First Finance Ltd, for the year-ended 31 December 2014.
First Finance has provided the Loan within the same week the subsidiary requested it.
Required:
a) Explain in terms of the companies Act, whether the above would be a contravention
or not (1 mark)
b) State also specifically the exception relevant to this given scenario. (1 mark)
2 (b) (10 marks)
Using the same information above as per 1.Part B (a), except assume now that First Finance
is operating as Insurance Company.

Required:
a) Explain in light of the Companies Act, what are the general provisions of the above
matter (4 marks)
b) State the factors that could be considered in assessing whether or not First Finance
is in contravention of the Companies’ Act. (6 marks)

QUESTION 2 (7 marks)

2.1 Mention 2 Auditing Postulates and why you think they would still be relevant in today's
work environment. (3 marks)

(2 marks for stating postulates, 0.5 marks for applying them)

2.2 Nexus Incorporated for the year ended 31 December 2014, has two line items that are
relevant to you. Their balances/totals are presented on their financial statements as follows:

For the year ended (as at) 31 December 2014 N$

Sales/Turnover (otherwise known as Revenue) 105,890,000

Property, Plant & Equipment 567,000

YOU ARE REQUIRED TO:

(Max 4 marks - 4 assertions, 4 application at 0.5 each)

1) (a) 2 Assertions that relate to the Income Statement (i.e. transactions & events)
(b) State for each of them their meaning relating (apply them) to Sales Transactions.

2) (a) 2 Assertions that relates to the Balance Sheet (i.e. Balances)

(b) State for each of them their meaning relating (apply them) to Property, Plant &
Equipment