UNIT 4: Week 3 Tutorial Question April 2024

Scope: Audit Process

Part A

The following procedures were carried out on the audit of Kwakuhle Kwethu (Pty) Ltd, a
manufacturer of interior decorating products. Kwakuhle Kwethu (Pty) Ltd is a subsidiary of Imizi
Ltd Group. The company purchases only from approved suppliers, both locally and internationally.

The following procedures/activities were performed during the course of the audit process:
1. Enquired from the order clerk as to what procedures he follows, if he is given verbal instruction
to place an order without required store requisition.

2. The designated auditor of your firm met with the management of Kwakuhle Kwethu (Pty) Ltd
to discuss, whether the preconditions for an audit were present.

3. A Junior Auditor obtained certificates of the balances on 30 April 2023 from all long-term
debtors.

4. You (the external auditor) visited the company’s website which contains extensive information
about the company’s organisational structure, board of directors, management personnel,
social and environmental programmes etc.

5. The Audit Partner took a decision to work closely with the company’s internal audit division
on a number of audit related matters.

REQUIRED:
Indicate during which stage of the audit process each of the procedures/activities listed above will
take place. Give a brief explanation for your choice. (10)

Part B (6 Marks)

Siyavivinya and Partners conducted the following audit procedures during the audit of Kwakuhle
Kwethu (Pty) Ltd
1. Reperformed the aging of a sample of creditors making up the Trade Discounts Allowed by
referencing to source documentation, for example invoices/purchase order/GRV.

2. Evaluated the lease agreements relating to the three leases capitalised as finance lease to
confirm that capitalisation was appropriate.

REQUIRED:

a) Identify the assertion(s) to which each of the procedures listed above is related and justify
your answer. (4)
b) Indicate who asserts/makes assertions (1)
c) Indicate who verifies assertions (1)