AUE2602/001/3/2021

CONTENTS
Page

ASSESSMENT CHANGES for 2021 ACADEMIC YEAR ......................................................................... 3

1.1 Assignment due dates .................................................................................................................. 3
1.2 The assignments .......................................................................................................................... 3
1.3 Other assessment ....................................................................................................................... 10
Tutorial Letter 001/3/2021 1.4 The examination ......................................................................................................................... 10

Corporate Governance in Accountancy

Semester 1 and 2

Department of Auditing

IMPORTANT INFORMATION
Please register on myUnisa, activate your myLife e-mail account and
make sure that you have regular access to the myUnisa module
website, AUE2602-2021-S1/S2, as well as your group website

BARCODE

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determining your year mark. No extension of the due dates can be given by the lecturers
Dear Student for these assignments.

ASSESSMENT CHANGES for 2021 ACADEMIC YEAR General remarks

Due to the ministerial request to extend the 2021 registration dates, Unisa had to amend both To go to the myUnisa website, start at the main Unisa website, http://www.unisa.ac.za, and then
the semester dates and the assessment arrangements for the 2021 academic year. click on the “login to myUnisa” link under the myUnisa heading on the screen. This should take
you to the myUnisa website. You can also go there directly by typing in http://my.unisa.ac.za.
During 2021 we will have only one semester and only one tuition and assessment period.
Compulsory assignment 01
The purpose of this TL001 is to inform you of the new assessment requirements for AUE2602
for students registered during 2021 for the one semester period. Instructions:
The assignment will take place on the Online Assessment tool located in your AUE2602
module site on myModules in myUnisa. No separate assignment 01 will be available. The
1.1 Assignment due dates Online Assessment tool will present the questions to you. It is a multiple-choice question
assessment. The assignment consists of 20 multiple-choice questions. The unique
The assignment dates for Assignment 01 and 02 have been revised. The due dates are as assignment number is 799477.
follows:
Claim your myUnisa password before the start of the semester if you have not done so
Assignment number Assignment unique number Assignment due date already.
01 799477 26 May 2021 Follow the following instructions on the AUE2602 module site:
02 623004 21 July 2021 1. On the top right corner of the page, click on the Sites button. A pop-up window will appear.
Choose the name of the module site for the first semester: AUE2602–21–S1.
2. On the left navigation (menu section), click Online Assessment.
1.2 The assignments 3. On the Online Assessment page, click the assignment link under the section Take an
Assessment. This will take you to the instructions page and allow you to start the
Assignment 01 must be done online on myUnisa under “Online Assessments”. You may submit assignment. Click Begin Assessment to start.
written assignments either by post or electronically via myUnisa. Assignments may not be 4. It will be a timed assessment of 60 minutes.
submitted by fax or e-mail. For detailed information and requirements as far as assignments are 5. Read the questions on the page and select your answer from the options provided or add
concerned, see the brochure, Study @ Unisa, that you received with your study material. text when requested.
6. You will have three times to attempt the assignment BEFORE the DUE DATE (26 MAY
Note: Assignment 02 can only be submitted in PDF format on myUnisa. The PDF file 2021). Your highest score will be used in calculating your semester mark.
should NOT be submit as “Read only” or “protected”. 7. You will receive feedback on myUnisa after the due date.
To submit an assignment via myUnisa: The assignment covers Topics 1 and 2 in the study guide.
Go to myUnisa. Compulsory assignment 02
Log in with your student number and password. Instructions:
Select the module from the orange bar. (1) Consult Study @ Unisa for instructions on how to submit written or typed assignments.
Click on assignments in the left-hand menu. Special instruction regarding the answering of this assignment
Click on the assignment number you want to submit. (1) This assignment covers topics 3 to 8 of the study guide.
Follow the instructions on the screen. (2) All the questions must be completed.
Please ensure that your assignment 01 or 02 reaches the University before the due date – late (3) Only selected questions will be marked.
submission of assignment 01 or 02 will result in you not being admitted to the
examination. Plagiarism:
PLEASE NOTE: You must submit assignment 01 or 02 in order to be admitted to the  Please refer to Unisa’s policy on plagiarism. You are reminded that your assignment must
examination while both assignments 01 and 02 must be submitted for purposes of be your own work.

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assignment involved
 By submitting your assignment, you confirm that you accept and will adhere to the terms of
the plagiarism declaration. Please note: Please note: You do not have to submit the declaration. By submitting any AUE2602
assignment, you automatically declare that you adhere to all the above with regard to the
o If you are found to be in violation of the declaration, you will receive 0% for specific assignment.
Assignment 02.
o If you copied all or a portion of your assignment from someone else (including tutors
and an online study group), both you and the person(s) you copied from will receive ASSIGNMENT 02: ESSAY TYPE QUESTIONS
0%. If any similar-looking/worded assignments are found, they will be considered to be
a violation of the declaration. UNIQUE ASSIGNMENT NUMBER:
When answering assignment or examination questions at undergraduate level, it is 623004
accepted that you studied from the prescribed study material and prescribed book; it is
therefore not necessary and impractical that you provide references to the study material DATE OF SUBMISSION:
or prescribed book. Reference to authors where information comes from mostly apply to
postgraduate studies, especially dissertations and theses. 21 July 2021

What is prohibited in terms of the Unisa Academic Integrity Policy at undergraduate level is
cheating.
Cheating (as a violation of academic integrity) refers to obtaining or attempting to obtain, or QUESTION 1 88 MARKS
aiding another to obtain, credit for work or an improvement in any assessment by dishonest or
deceptive means. Examples of cheating are: Corporate governance
 Collaboration on any form of formative or summative assessment, without the permission
Avengers Limited (Avengers) is a large distributor of consumer goods, general merchandise,
of the lecturer.
home improvement equipment; and a wholesaler of basic foods in South Africa. Avengers’
 Completing an assessment or taking an examination on behalf of another student.
governance structure consists of the Board of Directors, assisted by four committees (namely
 Possession, distribution, and/or use of unauthorised materials or technology before or the Audit Committee, Remuneration Committee, Risk Governance Committee and Nominations
during an examination or when preparing formative assessments. Committee). Avengers’ Board of Directors, as at 29 February 2021, consisted of the following
 Contracting (ghost or contract cheating) another person or a professional agency to individuals:
produce academic work, sometimes original work, on his/her behalf and then submitting it
as his/her own academic output. It inter alia includes the practice of submitting a Director Notes Position Age Years in
purchased research paper or assessment as one’s own work and purchasing an position
examination paper which has illegally been made available prior to the examination date. Mr Hulk 1&2 Chairperson 55 13
 Copying from another student for the purpose of completing any assessment. Mr Thor 2&3 Chief Executive Officer (CEO) 57 14
Mr Black Panther 2&7 Chief Financial Officer (CFO) and 57 20
It is therefore expected that the answers provided by students in assignments and the
CA(SA) Company Secretary
examination are their own work and this can include information from the prescribed book
Mr Hawk Eye 2&4 Chief Operations Officer (COO) 56 15
without referencing.
Mr Iron Man 2 Director Human Resources 55 15
PLAGIARISM DECLARATION: Mr Captain America 5&8 Non-executive director 61 17
Ms Black Widow 6&8 Non-executive director 46 1
By submitting AUE2602 Assignment 02, I declare that Mr Spiderman 8 Non-executive director 63 19
 I have read the Unisa Students’ Disciplinary Code Notes
1. Mr Hulk owns 15% of the equity interest in Avengers and was appointed as the chairperson
 I know what plagiarism is, that plagiarism is wrong and that disciplinary steps can be
taken against me if I am found guilty of plagiarism of the board by all the members of the board at the meeting on 1 August 2007. Mr Hulk
served as the CEO of Avengers until 1 July 2007. He also served as the chairperson of the
 This assignment, submitted by myself, is my own work and that I have referenced all Audit Committee of Avengers for a number of years.
the sources that I have used
2. Messrs Thor and Hulk have been friends since their school years. They form part of the so-
 I have not allowed any other student to copy my work called “Superhero Club” (a name they earned while at school); Messrs Black Panther, Hawk
 I know that if I am found to be in violation of this declaration I will receive 0% for the Eye and Iron Man also belong to this club.

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the locked cashbox) on the desk of the senior bookkeeper Cookie Oates. Only Cookie Oates
3. Mr Thor was appointed to the position of CEO of Avengers on 1 July 2007 by Mr Hulk and and Ted Baker have keys to the cashbox that is used in the shop.
he served as a member of the Audit Committee of Avengers for a number of years. :
Mr Thor and Mr Hulk are the two members serving on the Audit Committee. Social media

4. Mr Hawk Eye plays a significant role in the day-to-day management of Avengers as the Mr Thor expressed the view that the use of social media in Avengers is rapidly growing as it is
COO. becoming more pervasive and impacting many parts of the business. He requested that your
auditing firm should explain the social media exposure risks and the good practices that can be
5. Mr Captain America is the CEO of one of Avengers’s significant suppliers. incorporated to prevent a social media crisis.

6. Ms Black Widow serves on the boards of ten other companies from various industry REQUIRED MARKS
sectors; and the Board of Avengers believes that it makes her a valuable asset to the group
Regarding the “Corporate governance practices” section:
of companies.
1.1 Evaluate the corporate governance practices of Avengers according to the
7. Mr Black Panther informed the board of a possible contract relating to the import of retail principles and practices of the King IV Code™. You should state the relevant
stock. He was recently approached by an overseas company who indicated that there recommended practice and discuss issues relating to compliance and non-
would be huge savings in store for Avengers. They also mentioned that they would make it compliance with the King IV Report in your answer.
worth his while if he assisted them in winning the contract. He had done some research on
the company and found out that they are also involved in litigation relating to pollution at Limit your discussion to the information provided in the scenario.
their manufacturing plants. He did not accept the contract.
Present your answer under the following headings:
8. Messrs Captain America, Black Widow and Spiderman are the three members serving on a) Governing body (Board of Directors): Composition of the board (seven
the Nominations Committee. The chairperson of the Remuneration Committee, Ms Black comments) (10.5)
Widow, announced that she would resign as chairperson next month. b) Governing body: Chairperson of the board (three comments) (4.5)
c) Audit Committee: (five comments) (7.5)
Revenue and receipts – internal control d) Nominations Committee: (one comment) (1.5)
e) Company secretary: (one comment) (1.5)
You are a registered candidate auditor at an auditors firm. Your firm has been engaged to
evaluate Avengers’ internal control systems and you have been assigned to the revenue and One presentation mark will be awarded if the answer is presented under the
receipts cycle. Ben Dekker, the financial accountant of Avengers is of the opinion that the (1)
correct headings
application software is poorly designed and does not make satisfactory use of programmed
controls. He informs you that the company is experiencing a number of problems in the cycle 1.2 List four (4) duties of the Audit Committee concerning the auditor, according to
including the following: inaccurate and incomplete internal sales orders and picking slips being section 94 of the Companies Act of 2008 (4)
created.
1.3 In terms of section 76 of the Companies Act 71 of 2008, on the standards of
Revenue and receipts – community project directors’ conduct, critically evaluate the conduct of Mr Black Panther with
regard to the possible new contract for the import of materials. (3)
As a corporate citizen, Avengers assisted a community bakery to register as a company, sell
their goods in the canteen and expand their business. The bakery, registered as Bakeacake 1.4 Indicate in terms of the recommendations of the King IV Report, giving brief
(Pty) Ltd, now manufactures a range of biscuits and small cakes that it sells to supermarkets, reasons, which of the current board members will be suitable to be appointed as the
street vendors and the Avengers canteen. The newly appointed manager of Bakeacake has new chairperson of the Remuneration Committee. (3)
asked your firm to review the systems within the company that deal with cash. You have been
provided with the following information: Regarding the “Revenue and Receipts – internal control and community project”
sections:
From Monday to Friday between 07h00 and 09h00, street vendors can purchase biscuits and
cakes from the “vendor shop” which is attached to the factory. The vendor shop is run solely by 1.5 Describe the control procedures that should be put in place to ensure that
Ted Baker, an employee in the factory administration department. Sales are made only for cash. accurate and complete internal sales orders are generated for all the orders
Cash received is placed in a large metal cashbox. If the vendor requests a receipt, a pre-printed received from customers. (12)
numerically sequenced two-part cash receipt is made out by Ted Baker. He closes the vendor
shop at 09h00, takes the cashbox with him and returns to his office in the factory. Before 1.6 Identify and explain the weaknesses in the systems of Bakeacake (Pty) Ltd that
opening the shop on Monday mornings, he leaves the cash from the previous week’s sales (in deal with cash, based on the information given above. You are NOT required to
make recommendations. Structure your answer under the following headings: (12)
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2.2 List the disadvantages of packaged software (2)

Weakness 1:
Identify: What is the weakness… 2.3 List the advantages of packaged software (3)
Explain: Why is it a weakness…
2.4 Describe the programmed application controls that you would expect to find to
ensure that all valid restaurant sales are captured accurately and completely. (10)
Weakness 2:
…
Presentation marks will be awarded if the answer is presented under the correct 1.3 Other assessment
headings. (1)
An examination paper which serves as a self-evaluation assessment is included hereafter.
1.7 Describe in your own words what it means to be a responsible corporate citizen. (6)
Special instructions and the answering of this assessment opportunity
Regarding the “Social media” section:
It is advised that you complete this assessment opportunity under examination conditions within
1.8 List the possible metrics that Avengers can use to determine if a social media three hours without consulting your study material.
event is a crisis. (3)
After having completed this, you should compare your answers with the key in Tutorial Letter
1.9 In letter format, address Mr Thor’s questions; 201. This assessment opportunity must not be sent to the University.

1.9.1 List the key risks of social media exposure (4) Tutorial material for this assessment opportunity
1.9.2 List the controls that can be implemented to prevent a social media crisis. (7)
This assessment opportunity deals with the entire content of this module.
Two presentation marks will be awarded if the answer is presented under the
correct headings and for communication, logical reasoning and structure. (2) Purpose of this assessment opportunity

The purpose of this assessment opportunity is to serve as a revision of the study material as a
whole and at the same time is an indication of the standard which can be expected in the
QUESTION 2 25 MARKS
examination.
Mr Dliale achieved his lifelong dream when he opened his own restaurant, The Macaron. The
restaurant has been open for 12 months and has proved to be very popular. Unfortunately, the Attached find a previous examination that serves as a self assessment assignment.
Covid-19 pandemic struck internationally and the pressure of the lockdown has weighed heavily
on the restaurant. Mr Dliale have been forced to quickly come up with new adaptations of
QUESTION 1 50 MARKS
menus, points of service, delivery and takeout models that better serve local communities just to
keep the lights on. Mr Dliale and you attended university together. He contacted you with
questions about the computerisation of his operations. You are an audit trainee at Green Tick Inc. a firm of registered auditors in Johannesburg. You
were recently assigned to the audit of SaveUPlenty Limited (hereafter referred to as
Your initial enquiries have revealed the following:
“SaveUPlenty”). SaveUPlenty is a supermarket chain that focuses on fresh produce and offers
 The restaurant employs two cashiers, five permanent waiting staff, a barman and a wider range of choice food items. The following information pertains to SaveUPlenty:
a second chef (to fill in on the nights when Mr Dliale is off duty).
 For take away food and drinks orders are recorded on pre-numbered order pads. Each Corporate governance practices
waitress has her own unique sequence pre-numbered order pads.
 On completion of their meal, customers are required to proceed to the cashier and quote their Position Member of Member of Audit
order number. The cashier then rings up the cost of the meal using a copy of the waitress's Governing Body Committee
completed order form. The cash register is situated at the exit point. (Board of
Directors)
Mr Dliale has identified the Ikentoo software package as the most appropriate for the
restaurant’s needs. He has indicated that he is planning to replace the current cash register with Virat Amla Chief Executive Officer (CEO) Chairperson Chairperson
a computer terminal linked to a cash drawer and to install a terminal in his office which will be
Frans Operations Director Yes
used for recording all other accounting activities.
Klewsner
Noddy Nkwe Managing Director Yes Yes
2.1 Describe the controls that Mr Dliale should implement to restrict access to the
Mary Smith Independent non-executive director Yes
sales and computerised accounting applications. (10)
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On arriving at or leaving work, employees tick off their names on a “daily time list”, entering their
Marshall Independent non-executive director Yes Yes time of arrival or departure in the space provided. A large clock is located in the gate hut. The
Gibbs other controls relating to payroll remained the same.”
Gertrude Independent non-executive director Yes
Moloi
Thabiso Independent non-executive director Yes REQUIRED MARKS
Mudau
Note 1 2 1.1 With reference to the “Corporate governance” section, comment on
the information that SaveUPlenty Limited provided with reference to
the requirements of sound corporate governance in terms of the
Note 1: The board met twice during the first financial year. King IV Report.

Note 2: At the only meeting held by the audit committee during the first financial year, a Present your answer under the following headings:
decision was taken that the committee’s only duty is to nominate the external auditor for a) Governing Body (Board of directors): composition and
appointment. The audit committee will have a first meeting with the external auditors next appointments (five comments) (7½)
month. b) Audit committee: composition and appointments (three
comments) (4½)
Note 3: SaveUPlenty is compiling with their first integrated report, however the CEO indicated c) Audit committee: meetings (two comments) (3)
to you that he does not know what the six capitals are that the King IV Report make frequent d) General remarks (two comments) (3)
reference to.
 You should discuss issues in respect of both compliance and
Continuity of operations non-compliance with the King IV Report in your answer.
 Two presentation marks will be awarded if the answer is
Mr Amla wants to develop an information technology (IT) disaster recovery plan as part of presented under the correct headings, and for communication,
sound controls to minimise disruption should a disaster occur that could prevent processing logical reasoning and structure. (2)
and/or destroy financial data.
1.2 List the SIX (6) capitals as referred to in the King IV Report that
Password controls SaveUPlenty should report on in the integrated report. (3)

SaveUPlenty makes use of computerised accounting software when calculating the wages of 1.3 This question refers to the “Continuity of operations” section:
their employees. All the data is accessible from the various factories via an internet connection. Describe the controls that Mr C Amla should implement at
Each factory foreperson can access the data to verify hours worked as well as to update the SaveUPlenty Limited to minimise information technology (IT)
employee masterfiles. You obtained a screenshot of the password settings currently in use at disruption as a result of some disaster. Limit your answer to the
the factories: disaster recovery plan. (6)

1.4 This question refers to the “payroll and personnel” section:

Identify EIGHT (8) weaknesses in SaveUPlenty’s “account and
ACCOUNT AND PASSWORD SETTINGS – SAVEUPLENTY LTD SOFTWARE password settings” procedures, when considering the screenshot
Detail Setting obtained by you. (12)
Maximum password age 6 months
Minimum password length 4 characters 1.5 This question refers to the “payroll and personnel” section:
1.5.1 Explain four (4) weaknesses in SaveUPlenty’s wage system.
Password must meet complexity requirements Disabled
Limit your answer to the timekeeping function. (6)
Store password using encryption Disabled
Users must change password at first logon Disabled 1.5.2 Explain what the term biometric data means in a
Show characters when typing passwords Enabled computerised clocking system. (1.5)
Allow the same password for different usernames Enabled
Automatically log failed login attempts Disabled 1.5.3 Describe one advantage of biometric data over an
identification card or a clock card. (1.5)
Payroll and Personnel
QUESTION 2 50 MARKS

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mitigate the risks associated with the movement of inventory from
the goods for resale warehouse to the despatch section (6)
Inventory
2.2 Two of the components of internal control in terms of ISA 315 are
SaveUPlenty has comprehensive internal controls in place to ensure the inventory is control environment and control activities. There are five different
safeguarded against theft and misappropriation. However on review of the current categories of control activities.
year’s financial statements, the external auditors reported material discrepancies
between physical inventory on hand and perpetual inventory in the financial records. For each of the inventory controls provided in the question (1-7),
As a result, the CEO requested Internal Audit to perform an investigation into the indicate whether it relates to the control environment or control
effectiveness of the system of internal control over the ordering of goods, as an activities. Where your answer is control activities, indicate into which
important function in the purchasing of inventory for the company. category of control activity it falls. (15)

The following controls were implemented in the inventory cycle: Present your answer in the following table format:

1. Entry to and exit from the warehouse are monitored 24 hours a day by No. Control environment/ Control activity if applicable
surveillance cameras. Control activity
2. The company has a receiving supervisor, a despatch supervisor, and a stores
controller who is responsible for the custody of inventory. 1 Example: Control Activity Example: Access Controls
3. The financial controller, receiving supervisor, despatch supervisor and stores 2
controller all have the necessary skills and qualifications applicable to their job
descriptions. 3
4. The company has a full inventory count every two months which is attended by
the financial controller and external auditors. 4
5. One of the warehousing section’s objectives is to keep theft of inventory below
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1% of the total cost of inventory on hand. This is monitored monthly.
6. Pickers sign the picking slip after they have selected the goods from the store. 6
7. Any warehouse personnel, who are caught stealing inventory, are dismissed
immediately. 7

Ordering of goods
 Number 1 is included above as an example and no marks will
Internal Audit identified the following risks in the ordering of goods function, which be awarded for this.
could occur due to weaknesses in the system of internal control:  One mark will be awarded for the correct presentation of your
answer (1)
1. Ordering incorrect or unnecessary goods, resulting in liquidity problems and
wastage. 2.3 Describe the procedures to be followed when conducting a physical
2. Ordering unauthorised goods, resulting in losses to the company through fraud. year-end inventory count. (9)
3. Obtaining goods of inferior quality.
4. Paying unnecessarily high prices for goods ordered. 2.4 Advise management of the internal controls (in a manual system) that
5. Placing orders with suppliers that do not deliver/do not deliver timeously. could be implemented to mitigate the risks that you identified relating
6. Abusing order forms, for example by placing orders for private purchases. to the ordering of goods. (12)

Capital investment Present your answer in the following format: (1)

SaveUPlenty want to buy and install new fridges for the supermarkets country wide, as Risk No Internal control
the fridges that they have is not energy efficient. As this is a large capital expenditure 1 (Give ONE control)
the managing director asked you, the audit manager to assist in documenting the 2 (Give TWO controls)
controls that should be implemented when making the purchase. 3 (Give ONE control)
4 (Give ONE control)
5 (Give TWO controls)
REQUIRED MARKS 6 (Give ONE control)

2.1 Describe FOUR (4) internal controls that should be implemented to 2.5 This question refers to the “Capital Investment” section:
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Describe any FOUR (4) compensating internal controls to be

implemented to address the risks of material misstatement when
purchasing the fridges. (6)

1.4 The examination

Requirements for admission to the examination
Submission of the compulsory assignment 01 or 02 by its due date will give a student admission
to the examination in this module. Admission will be obtained by submitting this assignment in
time and not by the marks you obtain for it. Please ensure that this assignment reaches the
University before or on the due date. Late submission of the assignment will result in you not
being admitted to the examination. No extension will be given for the late submission of
assignments 01 and 02.
The examination period
The module will only be offered once for the 2021 academic year. Therefore, the examination
will be in period September to November 2021.
For all other information regarding AUE2602, you should still refer to Tutorial letter 101.

Regards
Your lecturers.

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