University of Limpopo

School of Accountancy
Private Bag X1106, Sovenga, 0727, South Africa
Tel: (015) 268 3241, Fax: (015) 268 3526, Email:thandekile.koza@ul.ac.za

FACULTY OF MANAGEMENT & LAW

SCHOOL OF ACCOUNTANCY

DEGREE AND DIPLOMA EXAMINATIONS

MODULE: CAUC031 TEST 2 : 2021

TIME: 2 HOURS MARKS : 80

INTERNAL EXAMINER : MS T KOZA

MODERATORS : MR JOSEPH MPJANE CA (SA)

: MS E GROBBELAAR CA (SA)

THIS PAPER CONSISTS OF 6 PAGES INCLUDING COVER PAGE

QUESTION 1 29 MARKS
QUESTION 2 26 MARKS
QUESTION 3 25 MARKS
INSTRUCTIONS:
1. Ensure that you have carefully read the SOA online assessment guideline for students.
2. The assessment should be hand written (NO electronic format will be accepted).
3. Calculate the time that you should spend on each question by multiplying the number of marks for each question by
1.5 to determine the time, in minutes, available for each question. Adhere to these time constraints in order to finish
the paper in the given time.
4. Only black pens are allowed, no tippex to be used.
5. Read questions carefully, if you need to provide explanations you should always use full sentences, refrain from
simply naming facts.
6. Answer all the question. Write neatly and legible. Use lined paper, so that answers are presented neatly.
7. The neatness, disclosure and presentation of your answers will be taken into account when marking your paper.
8. All the examination regulations of the University of Limpopo will apply during this assessment.
9. Write, sign and date the ethics declaration letter on the last blank page of your answer sheet.
10. You have 15 minutes to upload your attempt on Blackboard. Should you encounter any problems please email your
attempt to Thandekile.koza@ul.ac.za or contact me on 062 363 7978. Complete the checklist per the SOA online
assessment guideline for students before submitting your answer sheet.
 CAUC031 - TEST 2 2021

QUESTION 1 [29 MARKS]

PART A [16 MARKS]

Listed below are various risks that can be associate with the sales transaction in the revenue and
receipt cycle:

R1 Goods may be removed from the inventory warehouse for fictitious/unauthorised sales.
R2 Incorrect goods or quantities could be despatched.
R3 Goods despatched may not be invoiced.
R4 Invoices could be duplicated in the sales journal.
R5 Payments received from customers may not be banked, owing to theft or carelessness.

YOU ARE REQUIRED TO:

1.1 . Describe the internal controls that can be implemented to minimise the risks listed 15
above
And
List the internal control objective(s) for financial reporting affected by each of the risks
listed above.

You are required to present your answer in the tabular format below:
Risk Internal Control Control Objective(s)
1
Presentation Skills: Structure and Layout

PART B [13 MARKS]

The Electronic Funds Transfer (EFT) is one of the computer technologies used by many companies
for their revenue and receipt cycle. As this is now the most common way of receiving cash from
customers it is important for companies to have good controls over their bank accounts.
YOU ARE REQUIRED TO:
1.2 Why is it important to restrict access to a bank account in a computerised system? 4

1.3 Describe the access controls that should be implemented to ensure good control over 4
a bank account.
1.4 Provide a list of good password controls which can form part of access controls over a 5
bank account.

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 CAUC031 - TEST 2 2021

QUESTION 2 [26 MARKS]

Mega Bricks Mankweng (Pty) Ltd is a company that manufactures cement bricks, clay bricks as
well as paving bricks. The company’s accounting functions are carried out by the accounting staff
consisting of the accountant, Mary Mahlangu and two other clerical assistants, Cameron Mkhize
and Dean Twala. The new owner of the business, John Jonas, is concerned about a number of the
accounting systems and, not having a business background, has asked you to review and report
on certain systems. However, his immediate concern is the controls over the payment of suppliers.
To gather first-hand knowledge of how the system currently works, John Jonas himself sent you a
memorandum with an accurate description of the system:

TO: ABC Auditors

FROM: John Jonas
DATE:

RE: System description of the payment of suppliers

Herewith is the system description as well as the names of the persons involved in the payment
of suppliers.
1. When an invoice is received from a supplier it is promptly written into the purchase
journal by Cameron Mkhize and filed alphabetically by supplier name. When the
supplier’s monthly statement arrives Cameron Mkhize agrees the invoices received to
the statement. She also checks that any payments that were made to the supplier by
Mega Bricks Mankweng (Pty) Ltd are reflected in the statement.

2. If an invoice reflected on the statement has not been received, Cameron Mkhize
highlights the invoice(s) and marks it “outstanding” on the statement. The full amount
reflected on the statement is paid. When the outstanding invoice is received, it is filed
with the statement to which it relates and the “outstanding” written on the statement is
crossed out and dated, and the word “received” is written next to it.

3. To pay creditors, Mary Mahlangu accesses the electronic funds transfer facility on her
computer and compiles a schedule of payments to be made by EFT to creditors. She
obtains this information from the creditors list prepared by Cameron Mkhize. She
carefully checks the details e.g. bank, branch code, account number of the creditor to
be paid against a hard copy listing of this information which she keeps for all creditors.

Once she has completed the EFT payment schedule she asks Cameron Mkhize to
carry out an on screen random check of the details entered before authorising the
transfer herself. Mary Mahlangu is the only employee to have access to the EFT
facility and EFT’s can only be made from her terminal. Each payment on the creditors
list for which an EFT has been made (I.e. all creditors with balances over R 5 000) is
cross referenced by date to the EFT schedule by Cameron Mkhize. She also checks
that every creditor on the list has either a cheque number or EFT reference next to the
amount being paid.
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CAUC031 - TEST 2 2021

4. Cameron Mkhize passes the creditors list to Dean Twala as he is solely responsible
for the cashbook i.e. writing it up, posting to the general ledger and reconciling it
monthly

YOU ARE REQUIRED TO:

2.1 Identify the weaknesses in the suppliers’ payments system described in the 26
memorandum above by John Jonas.
And
Describe the risk (what can go wrong) for each identified weakness.

NOTE: You are NOT required to make recommendation.

You are required to present your answer in the tabular format below:
Weakness (10 Marks) Risk (16 Marks)

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 CAUC031 - TEST 2 2021

QUESTION 3 [25 MARKS]

Stainless Steel (Pty) Ltd is a Limpopo based company that sells stainless steel products. The
company was established in 1998 and has since grown to a well- known, reliable supplier of quality
stainless steel.
The company sells standard stainless steel doors and window frames, but also cater for custom
requirements, which they have made by their manufacturer. Their customer base is in mainly in the
Limpopo province as well as Mpumalanga and parts of Gauteng.

Stainless Steel (Pty) Ltd’s inventory is kept in their main warehouse located in Polokwane.

The warehouse is divided into various sections according to the type of product stored e.g. doors,
window frames etc. and is neatly stacked.

Stainless Steel (Pty) Ltd have recently conducted an inventory count and below are the details of the
inventory count.

The inventory count took place over two afternoons, from 1 pm to 5 pm on 29 and 30 April.
1. This was to enable the company to receive and dispatch goods during the mornings.
2. The count was carried out by ten warehouse employees who usually pick the goods to fill
orders. This worked well because they are familiar with the nature of the inventory and
where everything is stored.
3. The pickers decided amongst themselves which section of the warehouse to count. Phindile
Ntombela, the warehouse administration clerk, printed an inventory sheet (which includes
the descriptions and quantities of inventory on hand) for each section chosen by the picker.
The numerically sequenced inventory sheets were handed to the pickers who then counted
each item in their section of the warehouse, ticking off the quantities on the inventory sheets
once they had counted the item.
4. If the count quantity differed from the quantity on the inventory sheet, the counter (picker)
highlighted the item and quantity and wrote in the number he/she had counted.
At the conclusion of the count on the second day, the counters returned the inventory sheets
5. to Phindile Ntombela who identified the highlighted items and amended the quantities on the
perpetual inventory records to reflect the actual quantities on hand.

YOU ARE REQUIRED TO:

3.1 Identify the weaknesses in the year-end inventory count, based on all the information 16
given above.

Communication Skills: Clarity of Expression 1

3.2 List and explain four types of test of controls that auditors can use when testing 8
internal controls.
Present your answer in a tabular format as follows:
Type of Test of Control Explanation
4 Marks 4 Marks
WRITE, SIGN and DATE THE BELOW DECLARATION LETTER:
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 CAUC031 - TEST 2 2021

On the NEXT blank page of your answer sheet after the completed test, write down the following
statement:

By submitting this online assessment, I agree that I have adhered to the statements made in the
Declaration of Own work as per the UL SOA Assessment Guidelines for Students.

SIGNATURE ……………………. DATE ……………………...

This document should be scanned together with the rest of your test and submitted as one
document. Please note that if your test does not contain this declaration, then your test will
not be marked and you will receive zero for the test.

COMPLETE THE FOLLOWING CHECKLIST BEFORE SUBMITTING YOUR WORK.

Please follow the below guidelines to ensure that you have successfully completed the
assessment. DO NOT upload the checklist as this is for your own use.
Checklist questions for students’ Y/N
Have you written, signed and dated the above declaration on the last blank page of your
answer sheet.
Please note that if your test does not contain this declaration, then your test will not
be marked and you will receive zero for the test.
Has each handwritten page been numbered and labelled correctly?
Surname & Initials, Student number, Question number, Page number (i.e. page 1).
Have you reviewed your submission?
 Is each scan legible and clear?
 Have you scanned each page of your assessment (i.e. is it complete?)
Have you converted your assessment to a PDF document using a Scanner App?
Has the scan been named in the correct format?
Surname & Initials, Student number, Total number of Pages.
Does your scanned PDF document include the DECLARATION letter, signed and dated
by you?
Have you saved/emailed the scan/scans to yourself and downloaded them?
Do you know where the scans have been saved/downloaded to?
You are now ready to submit your assessment on Blackboard.
Note:
You run the risk of your assessment or a page of your assessment not being marked if the
submission is:
 Illegible / unclear.
 If it is Incomplete / cut –off.

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