Faculty : Management Sciences

Department :
Accountancy

Module Title : Auditing 2.1 & 2.2

BAAUX2A & BAAUY2A

Module Code :

Compiled by : MR D. MOKOTONG

2024 Semester 1 & 2

Year :

1
INDEX PART 1 MODULE INFORMATION
Word of welcome ................................................................................. 3
Lecturer’s teaching and learning philosophy ........................................ 3
Contact persons ................................................................................... 3
Rationale for the module ...................................................................... 4
Prerequisites ........................................................................................ 4
Learning material ................................................................................. 4
How to study ........................................................................................ 5
Class conduct ....................................................................................... 6
Assessment ......................................................................................... 6
Icons .................................................................................................... 9
Action verbs ......................................................................................... 10
Module plan ......................................................................................... 13

PART 2 LEARNING UNIT INFORMATION ................... 14

MODULE 1 (BAAUX2A) ............................................ 14 MODULE 2 (BAAUY2A)

............................................ 24

PART 1: MODULE INFORMATION

WORD OF WELCOME
The Department of Accountancy welcomes you as a learner to the Faculty of
Management Science at the Vaal University of Technology.

The department strives towards integration of existing knowledge with new knowledge
and to afford the learner the ability to:
• Think logically.
• Gain knowledge of internal auditing principles and audit processes
• Make a positive contribution to the field of study once you have completed your
studies.

The aim of this learning guide is to direct your studies for this subject in such a way
that you always know what is expected from you and where it fits into the general
program of your study.

2
LECTURER’S TEACHING AND LEARNING PHILOSOPHY
My teaching, learning and assessment philosophy is defined by my own experiences
as a student and as a lecturer. It is simply: teach what you plan to assess and assess
what you taught in compliance with the good principles of teaching, learning and
assessment and in such a way that students’ learning experience is enhanced. This
philosophy is neither static nor cast in stone but influenced by every new piece of
knowledge acquired through reading on my subject specifically and the education in
general.

I want to teach my students not only to demonstrate achievement of learning outcomes

in their various forms but also to stimulate their minds to go beyond the scope of what
is required and to become lifelong learners. My dream goal is to produce ethical,
responsible, competent professionals who have a sense of obligation to society and to
the profession if Internal Auditing.

CONTACT PERSONS
Title and Surname Office Telephone number and e-mail
number address
MR D. Mokotong G 201 [email protected]
Mrs. K. Muroa G206 [email protected]
Secretary Ms. Q. Mofoka G 102 016 950 9267

RATIONALE
This course forms part of your second-year studies in the Cost and management
(CMA) diploma and the Financial Information Systems (FIS) diploma. The objective
of this course is to provide insight and understanding into the role of auditors in an
organization.

On completion of this module, you should have a basic understanding of the

responsibilities, functions, and qualities of external and internal auditors, as well as the
framework for internal control. You should also have an appreciation of business cycle
and the application good principles of internal control in a business environment.

This subject relates closely to all the other modules you did, or are doing, in the
program since the aim of the qualification is to help you to develop your skills and
improve your knowledge so that you will be able to add value to your prospective
employer.

3
 PREREQUISITES
You must have passed Financial Accounting 1 Module 1 as well as Financial
Accounting 1 Module 2 before you can continue with this course.

LEARNING MATERIAL
Prescribed learning material

Although this learning guide is an important part of your study material, it is only a
guide, and you must obtain your own copy of the following prescribed learning material:
Jackson & Stent, 2020. Auditing Notes for South African Students. 11th Edition.
LexisNexis
Additional learning material
Apart from this learning guide and the prescribed learning material, it is of importance
that you gain access to the following sources that were reserved in the library.
1. Auditing Magazine

2. Articles found on the internet on related subject.

HOW TO STUDY
When you study Auditing 2 you should:
 Attentively study the outcomes on all levels (module, learning unit, learning
section);
 View the module plan for a bird’s eye view of what the module entails.
 View the list of contents of the first learning unit.
 Page through the learning materials to determine the organization, difficulty level,
and volume.
 Read the learning material according to the instructions provided in the learner
guide and learning outcomes.
 Do all learning activities (exercises) in every learning section (or learning part) of
the learner guide.
 Be well prepared for all group meetings (discussions) according to the time
schedule, in other words study the sections indicated/listed in the learner guide in
order to take part in the group discussion.
 Submit fully completed assignments according to the time schedule.
 Complete the summative evaluation [exercise(s)/questions] and follow the
instructions provided.

Although all people do not study the same way, the following method is a tried and
trusted method that can be used to study this module successfully:

4
 The SQ3R-method of
studying
S (Survey) You must obtain a general idea of what a specific part of the work is
concerned with. You should not try to memorise any part of the work
at this stage, and you should basically only read the headings and
words that might be printed in bold.

Q (Questions) In this phase you should formulate questions. A good guideline is

that you should turn every heading into a question that you should be
able to answer at the end of your studying. Write these questions
down.

R (Read) This is the actual learning of the work. This step requires intensive
concentration. You should read through all the work and try to find
answers to the questions you formulated earlier. It is now necessary
to take out the
most important parts and to identify keywords, make summaries, draw
patterns, etc.

R (Recite) In this step you should answer the questions you formulated in step 2
for yourself without looking at your book, notes, etc. This can be
done verbally, but it is better to write the answers down. After
answering the questions, you now have to mark your answers and
compare it to your book, your summaries, etc.

R (Review) The last step is to do revision of the work you have studied in order to
find out how you will remember it in the long run.

Much of it you can remember after a period of time. The more you
revise the work, the better

REMEMBER: You cannot study without writing

The more senses you use while studying, the more you will remember afterwards....
so
 See your work with your eyes.
 Hear your words with your ears - say it out loud.
 Feel your work by writing it down.
 Then you will taste the success

5
CLASS CONDUCT
The following is expected from the students, in order to make the learning environment
as friendly as possible:
• to be on time for classes, a 5-minute grace will be tolerated • to actively
participate in class discussions during the lecture.
• to have the prescribed textbook in each formal lecture period
• to switch off the cell phones during the lecture period
• to work through the homework exercises that are given at the end of each
formal lecturing period.
• to respect the other students by not disrupting the class, if you need to leave
the class while the class is still in progress.

ASSESSMENT
NQF LEVEL = 6 SAQA CREDITS = 12
Assessment will take place on a continuous basis by means of a variety of methods
and may include the following:
• Active participation in class discussions/presentations
• Two Assessments -CASS - ONLINE
• Practical assignments

The year mark is calculated as follows:

Assessment Sem. % contr. %Final Mark

Assessment 1 50%
Assessment 2 50%
Examination

Total 100%

REMEMBER: THERE IS NO SUCH THING AS A SECOND CHANCE

ASSESSMENT !

The marks you gather from Assessments will make up your semester mark, which will
make you eligible for the examination or not.

Take note: You need a semester mark of 50 to gain entrance to the examination. The
lecturer will not give you any extra marks if you fail to obtain 50. To pass with a
distinction you must obtain a final mark of 75% in a subject.

Scope of assessments/exam

6
The learning material that will be included in each assessment is indicated in your
learning guide and it is your responsibility to familiarise yourself with it. All the work
indicated will be assessed and there will be no “scope”. Assessment can include
multiple choice questions, longer questions, compulsory questions as well as choice
questions, oral presentation, etc.

Absenteeism from a formal written scheduled assessment and collection of

marked tests
If you are absent from a scheduled assessment without a valid excuse, a mark of zero
will be allocated for the assessment. The only valid excuses for being absent from a
scheduled assessment and the collection of the marked assessments, are your
illness and death of a relative supported by acceptable documentation:
(1) An original medical certificate, indicating the reason for your absence and the
dates you were off sick.
(2) a copy of a death certificate or a copy of a funeral notice indicating that you
attended the funeral of a close relative or friend.
It is the learner’s obligation to hand in these documents within 5 days after the
assessment date, or within 5 days after returning to the university after a longer
period of illness. If a medical /death note is handed in, the test will be forfeited. No
additional assessments will be written. If a medical certificate is handed in for
both semester assessments, the student will not qualify for admission to the
exam and will have to repeat the module. If you could not write any semester
assessments, you will not be able to gain access to the examination.

REMEMBER: THERE IS NO SUCH THING AS A SECOND CHANCE assessment!

What you should do if you were absent from a semester assessment

It is your responsibility to come and offer an excuse for being absent to the lecturer.
If you have been absent, you must follow the following procedure:

1. Complete FORM A
2. Attach the relevant documentation to FORM A
3. Hand this documentation to your lecturer within 5 days after returning to
class the lecturer has the right to verify any medical certificate/death
certificate/funeral notice or any other documentation with the issuer of the
document to test its validity.

Discussion of marks: Assessment Results and Assessment Marks

7
Assessments will be discussed during a normal class period, as indicated by the
lecturer. During this period, you will receive back your script and any
mistakes/problems must be sorted out. As soon as a student leaves the venue, NO
alterations will be made to the marks.

If you are absent during this period, the lecturer will bring the script to class once more.
If you still have not come to class to collect the script, you will have to arrange with
your lecturer to collect the script during the scheduled period for class. All scripts not
collected by the end of the semester will be thrown away. Scripts will not be carried
around by the lecturer every period and nobody will be allowed to take any script that
is not his own. No marks will be discussed or communicated to students other than
during the scheduled periods for class.

Your final semester mark will be made available to you in class where you will have
to confirm it by signing for it. If you are absent when semester marks are handed out
and discussed in class, it is your responsibility to ensure that you confirm the semester
mark on the VUT ITS system before the examination date. If you do not agree with
the semester mark as calculated by the lecturer, it is your responsibility to prove why
you do not agree, within 2 days.

Assignment

The nature and requirements of assessment will be discussed in class for each
assignment given.

NB!!!! Plagiarism

Plagiarism is the unacknowledged use of the words or ideas of others. To plagiarize

means to use the words or ideas of another to create the false impression that these
words and ideas are one’s own. To avoid committing plagiarism one must at all times
acknowledge the source from which one has borrowed certain words or ideas.

In terms of the VUT examination rules and regulations plagiarism in all its forms
(direct, by paraphrasing or by stealing ideas) is prohibited. Students are expected to
acknowledge sources and reference using the Harvard referencing method. Not
referencing will result in plagiarism which will earn you a zero (0%) being allocated for
the assignment and possible disciplinary action. If you copy work of another student,
you will both get zero (0%) and possibly be disciplined. This is serious; please see
the Examination Rules for the possible sanctions/penalties that may be incurred
by a student in this case.

8
ICONS USED IN THIS MODULE
1 2 3 4

Additional Answers Application Work Assignment

Reading
5 6 7 8

Estimated Study General Survey Group Discussion Individual

Time Exercises

9 10 11 12

List of concepts, Next Assessment

with or without Opening remarks /
Important Information According to the
explanations schedule Introduction

13 14 15 16

Outcomes Possible Exam Practical Work Revision

Questions
17 18 19 20

9
 Soundtrack Study the
Study the material in following passage
the prescribed book thoroughly
or article etc. Study Hints
21 22 23 24

Submission Date Summary of key Prepare your Test your

points knowledge
answers for the
next contact.
session /
practical
session
25

Prior Learning

ACTION VERBS
In preparation for your studies in this module the action verbs used in the assessment
of your work in this module are given to you in advance. Make sure that you
understand the meaning of each and that you deliver your work accordingly.

• Define
To supply the accurate meaning of a concept. [Example: Define internal control.]
• Name/mention/list/state
Briefly name/mention/list/state without giving details. Neither a discussion nor an
explanation is necessary. [Example: Name five internal control objectives.]
• Outline
Emphasise the major features, structures or general principles of a topic, omitting
minor details. Slightly more detail than in the case of naming, listing or stating or
information is required. [Example: Outline the major features of an audit file.]
• Comment

10
 Briefly stating your own opinion on a subject. [Example: Comment on the
difference between internal and external auditors in terms of their duties to audit
committees.]
• Indicate
Point out, make known, state briefly. [Indicate the causes of internal control
failure.]
• Identify
Give the essential characteristics or aspects of a phenomenon, for example a
good research design. [Example: Identify weaknesses in the internal controls of
the ABC (Pty) Ltd.]
• Demonstrate
Include and discuss examples. You have to prove that you understand how a
process works or how a concept is applied in real-life situations. [Example: Give
a written demonstration of the application of systems development life cycle to
new program.]
• Describe
Say exactly what something is like, give an account of the characteristics or nature
of something, and explain how something works. No opinion or argument is
needed. [Example: Describe the characteristics of good internal controls.]
• Discuss
Comment on something in your own words. Often requires debating two
viewpoints or two different possibilities. [Example: Discuss key internal controls
in a CIS environment and in a non-CIS environment.]
• Essay
An extensive description of a concept is required. [Example: Write an essay on
the value of an internal audit function to an organization.]
• Example
A practical illustration of a concept is required. [Example: Give an example of a
test of control.]
• Explain/clarify.
Clarify or give reasons for something, usually in your own words. You must prove
that you understand the contents. It may be useful to use examples or
illustrations. [Example: Briefly explain the following internal control characteristic:
Segregation of duties as it pertains to the revenue receipt cycle.]
• Illustrate
Draw a diagram or sketch the representation of a phenomenon or idea. [Example:
Write a short essay to illustrate the internal audit process.]

11
• Motivate
You should explain the reasons for your statements or views. You should try to
convince the reader of you view. [Example: Write an essay on your own view of
ethics and professional behavior. Motivate your answer.]
• Analyse
Identify parts or elements of a concept. [Example: Analyse professional due care
as it pertains to the internal audit function.]
• Compare/contrast.
Point out the similarities and the differences between objectives, ideas or points
of view. When you compare two or more objectives, you should do so
systematically – completing one aspect at a time. It is always better to do this in
your own words. [Example: Compare the IFAC code of ethics with the IIA code of
ethics.]
• Debate
Logically formulate an argument by discussing opposing viewpoints, such as
similarities and dissimilarities; pros and cons; advantages and disadvantages on
a given topic.
Follow a question attitude and hold a formal argument. [Example: Debate the use
of
CAATs as means of expediting an audit.]
• Criticise
This means that you should indicate whether you agree or disagree with a certain
statement or viewpoint. You should describe what you agree/disagree with and
give reasons for your view. [Example: Write critical comments about the
governments’ tendering process.]
• Evaluate
This means that you should analyse a theory, article, prescribed book, etc. to
determine its worth or value. You should constantly indicate whether you agree
or disagree with statements made and motivate your point of view. [Example:
Evaluate the effectiveness of ABC’s payroll preparation function.]
• Draw a mind map/diagram/figure.
Outline the main concepts pertaining to the study material by drawing a diagram
and completing the concepts in telegram style. Also indicate the relationships
between the different concepts. [Example: Draw a mind map of the definition of
internal auditing.]

12
MODULE PLAN

MODULE 1
Learning unit 1 Introduction to the Auditing Profession

Learning unit 2 Ethics

Learning unit 3 Rights, duties and responsibilities of auditors

Learning unit 4 Audit evidence

Learning unit 5 The Audit Process

Learning unit 6 Pre-Audit investigation and planning of Audit

Learning unit 7 Reporting

MODULE 2

Learning unit 1 Internal Control Framework

Learning unit 2 Revenue/receipt cycle

Learning unit 3 Acquisitions/payment cycle

Learning unit 4 Production/inventory cycle.

Learning unit Human resources/payroll cycle

LEARNING UNIT INFORMATION

Module 1

13
 Auditing
Specific Questions
Unit Assessment criteria Notes
outcome
10 ED

Page Para 11 ED F Possible examination questions

graph Page
Introduction to
auditing
1 Describe the The objective of a f/s audit 1/15 2 1.1 1/14 Explain the overall objectives of an audit in
objectives of a 1/16 3 1.2 1/14
can be explained terms of ISA 200 Differentiate between the
financial
statements The nature of the assertions roles played by shareholders, directors and
audit 1/17 4 1.3 1/15
can be explained and applied auditors
engagement
and The relevance of the 1/17 Discuss the role of the Companies Act 2008
the role of 56 1.4 1/15
assertions to the auditor can and its impact on the accounting/auditing
various parties 1.5
1/18 7.1 1/16
be explained and applied profession? Discuss the role of the AP Act
1.6 1/16
The responsibilities of 2005
1.21 Appe
auditors and management Discuss the role of the ISAs
ndix 1.7 1/16
can be described 1.8 List and explain the different assertion
categories:-
The role of the Companies 1.9 1/19 - Assertions about classes of transactions
Act 2008, ISAs and
assertions can be explained - Assertions about accounting balances at
year end
- Assertions about presentation and
disclosure
Discuss auditing postulates with practical
examples

14
 Questions
Specific
Unit Assessment criteria
outcome Notes
10 ED
Page Para 11 ED F Possible examination questions
graph Page
Done in Auditing Aspects

Ethics

2 Explain the The nature and rationale for 2/3 2.1 2/2 Define ethics and professional conduct
professional ethics 2/6-2/7 1-5 2.2 2/5 List and discuss the fundamental principles
and business
are understood and can be of SAICA’s code of ethics with which
ethics
governing the identified and explained 2/10 1-5 2.3 2/8 auditors must comply
work of the
The nature and rationale for
auditor List and explain the five threats to the
professional ethics are 2/12 3 2.4 2/9 fundamental principles of the IFAC’s code of
understood and can be 2/14- 1 2.5 2/24
ethics
2/15
identified and explained
List and describe how the accountant shall
3 2.6 2/38
2/24 evaluate whether the threat is at an
CHAP 4
acceptable level
4.1 4/2
4/3 Give examples of the five threats as well as
the related safeguards which can be
4.2 4/4
4/5 applied-self study

15
 Explain the auditors responsibility to
maintain an independent mental attitude

What is corporate governance

List the fundamental changes in both

business and society of

Questions
Specific
Unit Assessment criteria
outcome Notes
10 ED
Page Para 11 ED F Possible examination questions
graph Page

16
 the 21 century that was pointed out in the
4.3 4/9 4/5 King 4 report
4.7
4.4 Explain the important aspects of
4.8 4/7
sustainability
4.5
List the objectives of King 4
List and discuss the foundation stones of
King 4
CLASS TEST
______________20_____
Rights, duties and responsibilities

3 Identify the The rights and duties of the 3/52 4 3.1 3/45 Discuss the rights and restricted functions of
rights and
auditor covered by statute are the auditors in terms of Sec 93 of Co. Act
duties covered
by statute understood and can be 3/84 2.1, 3.2 3/72 2008
applied: 2.2 Explain the auditor’s duties in relation to an
3/84- 3.1- 3.3 3/72 audit terms of
• Auditing Profession Act 3/85
(AP Act) 3.5 Section 44(1) & (2) and (3) of AP Act 2005
• Code of Professional 3.4 3/72 Define a reportable irregularity in terms of
Conduct 3/85 Section 45(1) of the
NOTE
• Disciplinary Rules 3.5 3/76 AP Act 2005
• Companies Act 3/89 Explain the auditor’s duty to report on
• Close Corporations Act irregularities in terms of
• The Constitution of South 3.6 3/77
3/90 3/77 Sec 45(1)–(5) of AP Act 2005
Africa 3.7
3/90 Explain the auditors limitation of liability in
• Public Finance
Management terms of Sec 46 of the AP Act
On what grounds can a client sue its’
auditors?
Under what circumstances can the auditors
be liable for

17
 Questions
Specific
Unit Assessment criteria
outcome Notes
10 ED
Page Para 11 ED F Possible examination questions
graph Page
Act (PFMA) (d) negligence to a third party?
• Awareness of other Acts 3/91 3.8 3/78 Discuss the consequences for individual RA’s
that require an audit
for not reporting an RI.
• GAAS (ISA)
The legal liability of the 3/93 3.9 3/79 Is it a reportable irregularity? Questions 1-
10
auditor can be explained:
• In relation to clients

• In relation to third parties

• In relation to not
reporting a reportable
irregularity(RI)

18
 Identify and Responsibilities and liability: 7/33 1 -5 7.1 7/27 Define & differentiate between the various
explain the • In relation to fraud and types of fraud and error (ISA-240) with
responsibilities error incorporating 7/33 6 7.2 7/28 practical examples
material irregularities 7/34 7 7.3 7/29
and legal Explain how financial reporting fraud can
• According to the terms for
liability of the audit engagements for be perpetuated List and explain the various
appointments, resignation 7/35 7.4 7/29
auditor ways that assets can be misappropriated
and removal
• For implementing quality Explain the responsibility of management and
those charged with governance

Specific
Unit Assessment criteria
outcome Notes Questions
10 ED
Page Para 11 ED F Possible examination questions
graph Page

19
 control policies and procedures 7/35 7.5 7/29 Explain the auditor’s responsibility with regard
to ensure all audits are
2 to fraud as stated in ISA 240 (redrafted) with
conducted in accordance with
the statements of South African 7/43 7.6 7/38 practical examples
Auditing Standards and/or The Notes, 1-3 To whom may fraud be reported? (discuss)
Framework for the Professional
7/44 7.7 7/38
Practice of Internal Auditing
• For documenting the Explain the circumstances under which the
audit procedures performed, 17/45 7.8 7/39
auditor may need to consider withdrawing
the results thereof, and
conclusions drawn from an audit engagement
• To give consideration to Explain the auditor’s duties, responsibility and
the laws and regulations procedures in relation to detecting
governing an audit of financial contraventions of laws and regulations in terms
statements of ISA 250 , with practical examples

SEMESTER ASSESSMENT 1 ____________ 20___________

Audit Evidence
4 Explain the The fundamental principles 5/20 2.1 5.1 5/18 Explain how an auditor will determine whether
nature of, and
relevant to audit evidence can audit evidence is sufficient
the procedures
for obtaining be explained: 5/21 2.2 5.2 5/19 Explain how an auditor will determine whether

• sufficiency audit evidence is appropriate

• appropriateness/relevance 5/22 2.3 5.3 5/20
Explain the factors that will influence the
auditor’s judgement

20
 Questions
Specific
Unit Assessment criteria
outcome Notes
10 ED
Page Para 11 ED F Possible examination questions
graph Page
audit evidence • reliability whether audit evidence is sufficient and
• audit response to 5/25 1 5.4 5/23 appropriate with practical examples
insufficient/inappropriate audit
evidence In terms of ISA 500, evidence is obtained by
The procedures for obtaining 5/26 1.1 5.5 5/23 performing what procedures?
audit
1.7 List and describe the tools/procedures
evidence can be explained
5/27 5.6 5/25 available to the auditors in gathering audit
and applied: 5/27 5.7 5/25
evidence
• test of controls 2.2
o types o nature o 5/28 2.3 5.8 5/25
timing 5/26 Explain why auditors perform tests
5.9
o extent 5/26 of controls Can auditors perform
o evaluation of tests of 3 5.10
only tests of controls?
control 4(Not
and the effect on substantive
es) 4
procedures Explain why auditors perform substantive
• substantive procedures (Note procedures
• computer assisted audit s) Explain in detail the test of detail known as
techniques vouching Explain in detail the test of detail
known as tracing/verifying with practical
examples

21
 Questions
Specific
Unit Assessment criteria
outcome Notes
10 ED
Page Para 11 ED F Possible examination questions
graph Page
The Audit Process

5 Explain the The relationship the audit 6/6 1 6.1 6/6 Draw-up a diagrammatic representation of
concepts and objective and process can be the audit process in chronological order
principles: explained 6/7-6/8 1.1 6.2 6/7 List the activities of each stage :-
The interrelationship between 1.2 Preliminary
• Audit -
the various stages of the 1.3
process audit process can be - Planning
1.4
explained - Responding to assessed risk stage
• Audit
objective Concluding stage

Pre-Audit Investigations and PLANNING of audit

22
6 Explain The various consideration of 6/9 1 6.3 6/9 Explain the reasons why an audit firm may
procedures acceptance of prospective not wish to be associated with a particular
during pre- clients can be explained 6/10 3.2 6.4 6/10 client
audit The various sources of Explain how the auditing firm will determine
preliminary 6/10 4 6.5 6/10
investigations whether they can service a client adequately
engagement information can
be listed List and give examples of the sources /
6/13 1 6.6 6/13
procedures to gather information on the
business during “pre-engagement” stage of
the audit
Explain the reasons why planning of the audit
is important

Questions
Specific
Unit Assessment criteria
outcome Notes
10 ED
Page Para 11 ED F Possible examination questions
graph Page

23
 Explain the matters to consider in:
7 CHAP 7 6/20 1 6.7 6/19 - terms of the nature,

Explain the The concepts and principles 6.8 - timing of tests

6/23 1-7 6.9 6/21 - extent of tests

objectives and relevant to the planning of the
6.10 Explain what the final evaluation of evidence
aspects to audit work can be explained:
7/5-7/16 7/3 7/3 sets out to determine
consider during • 3
Importance of planning Define audit risk and its components in
7/5 7.1 7/6
the planning of • Extent of planning terms of ISA 200
• Describe the development 7/9 Intro
7.2 7/6
an audit Describe the limitation of control risk
of an overall audit plan 7.3
7/9
and matters to be Explain risk assessment
7.4
considered: 7/8 7/9 List the sources from which useful
o knowledge of the 7/11 - 7/13
7/12 7.5 information about a client can be discovered
business o understanding
the Explain the matters to consider when
7/14
accounting and internal control 7/8 7.6 gathering knowledge of the entity and its
7/18
systems
7/9 environment:
o risk and materiality o
nature, timing and 7/15 - 7.7 - A- industry
extent of 7/16 7.8 - B –Nature of industry
procedures Explain the matters to consider when
7/19 obtaining knowledge of the business in a
7/22
computerised environment
Discuss risks specific to a computerised
environment
Define materiality in terms of ISA 320

24
 Specific
Unit Assessment criteria
outcome Notes Questions
10 ED
Page Para 11 F Possible examination questions
graph ED
Page
o co-ordination, direction, o
supervision and review

Reporting

8 Explain the The fundamental principles 18/3 1 18.1 18/4 Explain the objectives of an audit in terms of
objectives of 18.2 18/4 ISA 700
relevant to the audit report
an audit Discuss what an auditor needs to consider in
report and be can be explained: 18/4 1,2
able to 18.3 18/5 order to form an opinion on Financial
understand its • Objective of an audit
report 18/6 1,2,3 Statements
contents and
implications 18/7 18.4 18/7 Describe the structure AND content of the
• Structure and content of
18.5 18/7
standard/unmodified audit report
an unmodified report
Explain the responsibilities of directors for the
• Reasons for and types of F/Statements
modification Explain the auditors responsibilities for the
audit of the
• The impact of RI on the
audit report F/Statements

25
 SEMESTER ASSESSMENT 2_____________ 20_________________

LEARNING UNIT INFORMATION

Module 2

Specific Assessment criteria (Possible

Week Unit Topics discussed Jackson & Stent Questions
outcome examination questions)

10 ED- Paragraph 11 ED
Page Page
UNDERSTAND THE FRAMEWORK FOR INTERNAL CONTROL AND INTERNAL
CONTROL EVALUATION

26
25-29 2 5.1
July 1 Describe the Definition of Internal control 4 5.2
objectives, 5/4 Explain the limitations of internal control
Internal control objectives
nature and
evaluation of Limitations of Internal Control 5/5-5/20 5 5.3 in detail, with practical examples
internal control The Accounting System List and explain the five components of
Who is interested in what? 5/5-5/20 1-7 5.4 internal control as stated in ISA 315 para.
Characteristics of Internal 5.15 5.5 A51
control
List and explain the elements of each
(Done in Auditing Aspects )
component of internal control
Explain the external auditors interest in
internal control Explain the
characteristics of good internal control in
detail with practical examples, where
applicable –
ASSIGNMENT

CLASS TEST _________ 20_______

23

27
 Specific Assessment criteria (Possible
Week Unit Topics discussed Jackson & Stent Questions
outcome examination questions)

10 ED- Paragraph 11 ED
Page Page
1 - 19 2 Know the a. The concepts and 10/2- 2 10.1 Explain the characteristics of the
August principles relevant to risk 10/21 4
activities and revenue and receipts cycle
assessment and internal
documents of 10.2
control in respect of the List and explain the basic functions of
the Revenue
Revenue and receipts 10/3-10/5 5
and Receipts any revenue and receipts cycle
cycle;
cycle and be 10.3
able to relate Discuss the purpose/objective of each
10/6 6
the functions in the revenue and receipts
characteristics 10.4
of good cycle
internal control List and explain documents in this cycle
to the cycle

28
 b. The concepts and 10/10- 7 10.5 Explain the functions and the risks that
10/19
principles relevant to exist in the different departments
evaluating a system of 8 10.6 Explain the control procedures that
1020-
• internal control: 10/21 should be in place in a manual system to
• 10.7
Design and operation minimize the possible risks in the
Common risks and
different departments
related control features 10.8
Discuss controls unique to a
computerised revenue and receipt cycle
24

Specific Questions Assessment criteria (Possible

Week Unit Topics discussed Jackson & Stent
outcome examination questions)

10 ED- Paragraph 11
Page ED
Page

29
 10/40- 9 Explain some unique and difficult risks
10/43 10.9 associated with cash sales
List and explain principles of controls
10 10.10 and examples of these controls in a
10/44-
10/53 cash system
Explain the role of other components
of IC in this cycle NB!! You must be
able to apply this theoretical
knowledge to practical case studies.
22 3 Know the a. The concepts and 11/2 2 11.1 Explain the characteristics of the
Aug. - 4
activities and principles relevant to risk acquisitions and payment cycle
- documents of 11/12 11.2
assessment and internal List and explain the basic functions of
2 Sep. the
Acquisitions control in respect of the 11/3- 5 the acquisitions and payment cycle
and Payments 11/4 6 11.3
following Business Cycle, Discuss the purpose/objective of each
cycle and be
able to relate can be explained and 11/5 functions in this cycle
the 8 11.4
applied Purchases and List and explain documents in this cycle
characteristics
of good Payments cycle;
internal control 11.5
11/14- Explain how stores personnel will
to the cycle b. 11/15
The concepts and determine when goods are required
11.6
principles relevant to Give the functions, relevant documents

evaluating a system of and explain the risks that

• internal control: 11.7 exist in the different departments

Design and operation Explain the control procedures that

should be in place to

30
 25

Specific Questions Assessment criteria (Possible

Week Unit Topics discussed Jackson & Stent
outcome examination questions)

10 ED- Paragraph 11
Page ED
Page
Common risks and related minimize the possible risks in the
control features 11.8 different departments Discuss controls
unique to a computerised acquisition &
payments cycle

NB!! You must be able to apply this

theoretical knowledge to practical case
studies.

31
 ASSESSMENT 1 : _____________ 20______
(Units __________)

12 – 4 Know the a. The concepts and 12/2 1 12.1 List and explain the major activities of
16 activities and – 2 12.2
principles relevant to risk the inventory cycle List and explain the
Sep. documents of
the Inventory assessment and internal characteristics of the inventory cycle,
and 12/4 35 12.3
control in respect of the with practical examples where
Production
12/6- 6-7 12.4
cycle and be following Business Cycle, applicable
able to relate 12/9 12.5
can be explained and Explain the objectives of the inventory
the 6-7 cycle
characteristics applied Production,
of good 12.6 List & explain the documents in this
Inventory and cycle
internal control
Warehousing cycle
to the cycle Give the functions, relevant documents
and explain the risks that exist in the
different departments-(warehousing
+ production)
Explain the control procedures that
should be in place to minimize the
possible risks in the different
departments

26

32
 Specific Questions Assessment criteria (Possible
Week Unit Topics discussed Jackson & Stent
outcome examination questions)

10 ED- Paragraph 11
Page ED
Page

33
 The concepts and (warehouse production)
b. principles relevant to 12/11 8.1 12.7 Explain the control procedures that
evaluating a system of should be in place in terms of the
internal control: 12/12 8.2 12.8 following:
12/13 9
• Design and operation • Movement of goods
• Common risks and 12.9
• Physical control
related control features 12.10
• frequent comparison and
reconciliation of actual assets
with theoretical assets
• accumulating costs for job
costing systems
• accumulating costs for process
costing systems
Explain the procedures that should be
followed when conducting cycle counts
of inventory
Year end inventory count
Explain how computerization
impacts this cycle NB!! You must be
able to apply this theoretical
knowledge to practical case study
19 – 5 Know the a. The concepts and 13/2 1&2 13.1 List and explain the unique
30 principles relevant to risk -
activities and characteristics of the payment of
Sep. assessment and internal
control in respect 13/2 3 13.2 salaries and wages cycle

34
 documents of Explain the basic requirements for any
wage system
the Payroll and
Personnel
cycle and

27

Specific Questions Assessment criteria (Possible

Week Unit Topics discussed Jackson & Stent
outcome examination questions)

10 ED- Paragraph 11 ED
Page Page

35
 be able to of the Payroll cycle
relate the
b. 13/9- 7 13.3
characteristics
13/13 Give the function, relevant documents
of good The concepts and
internal control 7 13.4 and explain the risks that exist in the
to the cycle principles relevant to
evaluating a system of different departments
•
• 8 13.5 Explain the control procedures that
internal control:
13.6 should be in place to minimize the
Design and operation
Common risks and possible risks in the different
related control
features departments Explain how
computerization impacts this cycle
Discuss the characteristics of a good
internal control system in terms of the
payment of salaries and wages cycle
NB!! You must be able to apply this
theoretical knowledge to practical case
studies
ASSESSMENT 2 : ______________
20____ (Units _______)

October REVISION

October FINAL ASSESSMENT STARTS

36
 28
Auditing 2 Module 1 (BAAUX2A) Assignment for Semester 1

Due date: ___________20________ Technical requirements:-

Handwritten Page layout:

• Cover page: Title, subject name & code, student name & number,
date.
• Contents: Index
• Rubrics: Completed Students’ checklist and grading
• Margins: Top: 2cm
Bottom: 2cm
Left: 2cm
Right: 3cm

• Both left and right hand margins must be justified (only in the
paragraphs)
• Header: 1,25cm
• Footer: 1,25cm
• Spacing: 1.5 lines
• Font: Arial 12
• Header: Your student number, Surname, Initials

37
 • Footer: Page number in the middle of the page

Submission: On or before ____________ 20__ in normal lecture period. No assignment

be accepted without the completed students’ checklist. 10% cumulative will be deducted for every day that the
assignment is late.
Plagiarism: Plagiarism in all its forms will not be tolerated
TITLE: Professional Conduct

1. Practical question (2 – 3 pages)

Read the scenario given on the next page and answer the questions posed.

2. Bibliography (4 – 8 sources)
You need to include a complete bibliography of all the sources consulted. Please follow the Harvard Referencing Technique
in the text and bibliography. See examples below.

Practical Question (Adapted from Graded Questions on Auditing)

The conceptual framework approach to dealing with professional conduct issues requires that professional accountants:
1. Identify threats to their compliance with the fundamental principles of integrity, objectivity, professional competence and
due care, confidentiality and professional behaviour.
2. Evaluate whether the threat is clearly insignificant and
3. Apply safeguards to eliminate or reduce the threat to an appropriate level.
Required
Complete the charts on the following section by filling in the blank columns. Where you identify the fundamental principles
threatened provide a brief explanation. List two safeguards for each situation.

EXAMPLE FUNDAMENTAL SAFEGUARD

PRINCIPLE THREATENED

38
1. Walter Wiseman an audit partner
owns 15% of the shares in Buttco
(Pty) Ltd, an audit client.

2.
Joe Zulu, an audit manager, has been
offered a highly paid job at one of his
audit clients.

1. Harris Ford, a partner in an auditing

firm has been asked by a 3rd party to
provide a report on a client’s
computerised sales system, which he
and a team had recently designed and
implemented.
Clarence Kleynhans, who was the
2. financial manager of Kambo (Pty) Ltd
recently resigned to go back into the
profession.

He was employed by the audit firm

that holds the appointment of auditor
of Kamp (Pty) Ltd and because of his
knowledge of the company it has been
suggested that he be placed in charge
of the audit.

Harvard Referencing Style – Examples

1 Article: Newspaper - Author (name of reporter/author is known)
Author. Date. Title of article. Title of newspaper: page reference, Month and day.
STEWART, M.T. 1988. Should privatisation prosper? SAA in the year 1990. The Argus: 3, May 17.
2 Book: Single author

39
 Author. Date. Title: subtitle. Place: Publisher.
CHASE, Jennifer A. 1979. Advertising: the hits and myths. New York: Doubleday.
3 Internet
Author. Date (last updated). Title of website. [Online]. Available: URL (Internet address). [Date you accessed the site]
.McKIERNAN, G. 1996. Project Aristotle(sm): automated caterogization of Web resources. [Online]. Available:
http://www.public.iastate.edu/~CYBERSTACKS/Aristotle.htm [4 September 1996]
Rubrics – Corporate Governance - Ensure that your assignment fulfils ALL the requirements BEFORE you submit!

40
 Student’s check- Lecturer
list before
submitting
Requirements Yes/ No Marks Marks Maximum
marks
General layout & presentation (30 marks)
Is the assignment handwritten and readable? 5
Did the student handed-in the assignment on due 5
date?
Did the student use the prescribed font and font size? 2
Are both left and right hand margins justified? 2
Are the sizes of the margins correct? 2
Are the headings and sub headings numbered in a 2
logical way?
Is the spelling and grammar accurate in all respects? 10
Have sources been correctly cited in the text according 5
to the Harvard Standard?

Have the pages been numbered? 1

Did the student insert a header according to the 1
prescription?
Did the student include a bibliography according to the 5
Harvard Standard?

Practical question (20 marks)

Is the answer of an adequate length?
Score for practical question - Fundamental principle 30
threats 30

41
 - Safeguards

TOTAL 100

NB: Indicate Yes/No on the checklist and grade/mark yourself BEFORE handing in assignment!!

Auditing 2 Module 2 (BAAUY2A) Assignment for Semester 2 --Handwritten

Due date: _________________20____

Technical requirements:- HANDWRITTEN Page layout:

• Cover page: Title, subject name & code, student name & number,
date. • Contents: Index
• Rubrics: Completed Students’ checklist and grading
• Margins: Top: 2cm
Bottom: 2cm
Left: 2cm
Right: 3cm

• Both left and right hand margins must be justified (only in the

42
 paragraphs) • Header: 1,25cm
• Footer: 1,25cm
• Spacing: 1.5 lines
• Font: Arial 12
• Header: Your student number, Surname, Initials
• Footer: Page number in the middle of the page

Submission: On or before ___________ 20__ in normal lecture period. No assignment will

be accepted without the completed students’ checklist. 10% cumulative will be deducted for every day that the
assignment is late.
Plagiarism: Plagiarism in all its forms will not be tolerated TITLE: INTERNAL CONTROL
1. Introduction (½ page)
Describe in your own words what internal control is

2. Explain the characteristics of good internal control in detail with practical examples
(2-3pages)

Rubrics – INTERNAL CONTROL - Ensure that your assignment fulfils ALL the requirements BEFORE you submit!

43
 Student’s check- Lecturer
list before
submitting
Requirements Yes/ No Marks Marks Maximum
marks
General layout & presentation (30 marks)
Is the assignment handwritten and readable? 5
Did the student handed-in the assignment on due 5
date?
Did the student use the prescribed font and font size? 2
Are both left and right hand margins justified? 2
Are the sizes of the margins correct? 2
Are the headings and sub headings numbered in a 2
logical way?
Is the spelling and grammar accurate in all respects? 5
Have sources been correctly cited in the text 5
according to the Harvard Standard?

Have the pages been numbered? 1

Did the student insert a header according to the 1
prescription?
Did the student include a bibliography according to 5
the Harvard Standard?

Introduction (10 marks)

Is the introduction of an adequate length? 3
Is the topic properly introduced? 2

44
Characteristics of good internal control (50 marks)
Is the discussion of an adequate length? 10
Is there evidence of supporting literature? 10
Did the student identify all the characteristics of good 30
internal control?
Conclusions and recommendations (10 marks)
Is the conclusion and recommendations of an 10
adequate length?
TOTAL 100

NB: Indicate Yes/No on the checklist and grade/mark yourself BEFORE handing in assignment!!

45
Form A

46
Student Number

47