POLYTECHNIC OF NAMIBIA SCHOOL OF ECONOMICS AND FINANCE BACHELOR OF ACCOUNTING AUDITING 200 (AUD 6128) 1 OPPORTUNITY EXAMINATION QUESTION PAPER | | oars, NOVEMBER! 2683) DURATION: 3 HOURS MARKS: 100 INSTRUCTIONS 1. Answer ALL the four questions 2. Start each question ona new page REQUIREMENTS: — None EXAMINER: — Mr. OKamotho, Mr, ASimasiku and M/s 2 Stellmacher MODERATOR: Mr. T FMashoko ‘Ths paper consists of 2 pages excluding this cover pageQuestion 1 Asubstantial number of organisations in Namibia are required by law to have their annual financial statements audited. The auditors are required to provide an audit report that is published in the annual report of the organisation. Required: a) Describe the type of information an external audit report should provide regarding the organisation and its financial statements. (10 marks) b) Discuss the purposes of an external audit to all relevant stakeholders, (@ marks) ©) Explain the celationship between internal and external audit within an organisation (7 marks} (Total 25 marks) Question 2 a. South Africa Institute of Chartered Accountants (SAICA) and The Institute of chartered Accountants of Namibia (ICAN) have adopted a Professional Code of Ethics. The Code is largely based on the International Federation of Accountants (IFAC) Code of Ethics, but provides additional explanatory guidance in some areas. The Code identifies five fundamental principles that all pro‘essional accountants should observe: Required Identify and briefly explain the five fundamental principles (40 marks) ». Compliance with the fundamental principles in SAICA’s Code of Ethics and Conduct can be threatened in a number of ways Required: Identify and briefly explain the FIVE ethical threats fo independence and objectivity and for each threat identify ONE example of a circumstance that may create the threat, (15 marks)Question 3 a. Briefly explain the nature of the statutory relationship between the following parties, as faras the company's books of account are concerned i. Shareholders and directors. (5 marks) ii, Shareholders and auditors, stating any specific reporting disclosure(s) of the Auditors to Shareholders in the auditor's report regarding books of account (6 marks) iil Directors and auditors, stating two auditor rights and one auditor duty in relation to Directors (4 marks) b. Stote four mportant features of properly maintained books of account that are mandated by the Companies Acts. (4 marks) c. Compare and contrast the role of internal and extemal auditors. (6 marks) (Total 25 marks) Question 4 a] Inorder for auditors to operate effectively and to provide an opinion on an entity's financial statements, they are given certain rights. Required: State four (4) rights of an aucitor, excluding those related to resignation and removal. (4 marks) b) ISA 316 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment requires auditors to obtain an understanding of control activities relevant to the audit. Control activites are the policies and procedures that help ensure that management directives are carried out; and which are designed to prevent and detect fraud and error occurring. An example of a control activity is the maintenance of a control account. Required: Apart from maintenance of a contro! account, explain four (4) control activities a company may undertake to prevent and detect fraud and error. (8 marks) c) Describe five (5) limitations of external audits, (10 marks) d) Define corporate governance and explain the inclusive approach to it (3 marks)