MAIN ONLINE SUMMATIVE ASSESSMENT

PROGRAMME Bachelor of Commerce in Information and Technology Management

MODULE Auditing 3T
INTAKE January 2022
DATE 04 July 2022
TOTAL MARKS 100
SECTION A [100 MARKS]

Answer ALL the questions in this section.

Question 1

1.1 CIMA's code of ethics establishes a conceptual framework that requires a professional accountant (15 marks)
to identify, evaluate, and address threats to compliance with the fundamental principles. The
conceptual framework approach assists professional accountants in complying with the ethical
requirements of this code and meeting their responsibility to act in the public interest. There are a
variety of threats that can impact an auditor’s compliance to the fundamental principles of the
code. List and explain these 5 threats

1.2 The fundamental ethical principles that all chartered accountants and registered auditors should (10 marks)
comply with are laid down by the SAICA and IRBA code of professional conduct. You are required
to identify and provide a brief explanation for each of the fundamental ethical principles

Question 2

The purpose and objective of an auditor is to form opinions on whether the operations of an entity are effective and efficient
and if financial statements are reliable and do not contain any material misstatements. Once an audit is accepted by an
auditor they will need to gather evidence that is sufficient and reliable which will support any opinions that are made by the
auditor. The audit process is a logical and systematic process which is planned and implemented in accordance to the
audit standards.

2.1 Prior to the audit conducting an audit there are stages which need to be followed. What are these (4 marks)
stages?

2.2 There are two requirements which should be fulfilled prior to the acceptance of an engagement (4 marks)
which is to establish if the pre-conditions of the audit exist and ensuring that there is a mutual
understanding which is present between management, the auditor and individuals who are in
charge of governance of the audit engagement. What are the two pre-conditions of an audit?

2.3 The audit plan consists of a greater amount of details as compared to the audit strategy. Identify 2 (2 marks)
items which should be documented in the audit plan.

Question 3 (10 Marks)

Corporate governance is defined as the framework of rules and practices by a company’s board of directors to ensure
accountability, fairness and transparency in the company’s interactions with its shareholders, creditors, customers and
other stakeholders. What are the objectives of the King IV report on corporate governance?

Question 4 (20 Marks)

There are various types of auditors who have a variety of skills to conduct audits that are different in nature. Each of the
different types of auditors share one characteristic in common, which is independence, as any audit conducted without a
degree of independence from the entity being audited will make the results and assurance provided by the auditor
‘worthless’. What are the 5 types of auditors and their functions? Provide relevant examples to support your answer

Question 5 (20 Marks)

The control environment includes the governance and management function of an organisation. It focuses largely on the
attitude, awareness and actions of those responsible for designing, implementing and monitoring internal controls. One of
the main requirements in planning an audit is to study and evaluate the existing internal controls so as to define the tests to
be applied to the entity being audited. Internal Control is a process, affected by an entity’s board of directors, management
and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following
categories:
Compliance with applicable laws and regulations
Effectiveness and Efficiency of operations
Reliability of financial reporting
You are required to discuss the components of internal controls that are integrated with managements processes.

Question 6

6.1 Information Technology audits are used to examine and evaluate organization systems internal (10 marks)
control design, efficiency and effectiveness. This usually includes but not limited to development
processes, security protocols, information systems usage etc. The audit examines the environment
of automated information systems and how people use those systems. You are required to discuss
the different types of controls that are useful to an auditor when conducting an audit in an IT
environment?

6.2 Indicate five factors that an entity will need to consider when making a decision regarding the use (5 marks)
of CAAT’s

END OF PAPER