Eastern Cape's city of Ggeberha is home to Eastern

Shore (Pty) Ltd which is a large transportation company. You have been

appointed as the new internal auditor and you have been tasked with evaluating

the company’s accounting systems relating to the Finance and Investment cycle. During

your evaluation the following came to your attention:

Each sectional accountant is responsible for capital

expenditure for their own section. Every year, budget allocations are raised in

accordance with the consumer price index by the financial director. If a

certain section does not spend their budget in the financial year then that

section’s budget is reduced for the following year. Therefore, all sectional

accountants make sure that they use the full budget so it does not get reduced

in the following year.

Each sectional accountant is responsible for capital

expenditure for their own section and can authorise it at their discretion. Every

year, budget allocations are raised in accordance with the consumer price index

by the financial director. If a certain section does not spend their budget in the

financial year then that section’s budget is reduced for the following year.

Therefore, all sectional accountants make sure that they use the full budget so

it does not get reduced in the following year.

Identify the weakness

in the system of investing in

capital equipment based on the purchase of capital equipment purchased just

before year-end.

The company has

good internal controls, which addresses and is based on the generally accepted

components of internal control, namely,

·       the control environment

·       the risk assessment process

·       the information system relevant to financial reporting

·       control activities

·       the monitoring of controls

The following

piece of information relates to the payroll and personnel cycle of a company:

Management

promotes sound policies regarding human resources.

From the following

list of options, identify the component of internal control to which the above statement

relates:

Which of the following duties should be performed by different staff members in the acquisitions and payments cycle in order to achieve proper segregation of duties? (Please note there could be more than one correct alternative.) Select all the correct alternatives.

You are the audit senior assigned to the audit of Speedy Ltd, a motor vehicle spares company.  

You obtain an understanding of the payments function within the acquisition and payments cycle at Speedy. 

Mr Mahlangu, the creditors clerk prepares the creditors schedule of payments on a bi-monthly basis. When preparing the schedule, he will include all suppliers in the creditors Masterfile and should no payment be made to a specific supplier, the amount will be reflected as nil. The head of the creditors section, Mrs Shabangu will access the schedule of payments prepared by Mr Mahlangu and perform the necessary procedures before processing. 

Which one of the following control objectives will be achieved by the above-mentioned procedure? 

What is the minimum number of members that the risk committee should have according to the recommendations of the King IV Report?

All sales are made on credit. The following control takes place in a company’s warehousing function:

Picker to initial the picking slip for each item picked and identify on the picking slip items that cannot be supplied.

Which one of the following risks will be mitigated best by the above-mentioned control?