You are the internal auditor of XYZ Limited, a transport company. Vehicles

and trucks are very important to the continual operations of the company. The

board of directors have requested internal audit to perform a financial audit

(substantive procedures) to verify the value of vehicle and trucks in the

balance sheet of the company.

Fixed assets:  Vehicles and

trucks     R2 350 000

REQUIRED

 Match the audit objective in column A with the correct

audit engagement

procedure

QUESTION

Naval Shipping (Pty) Ltd is a large shipping company. The company’s head

office is in Cape Town. Cargo is shipped to and from major harbours in Africa and worldwide. Cargo is shipped in tankers and container ships. You are part of the team of internal auditors responsible for a strategic audit of the risk management process.

The following risks were identified during the planning stage of the internal audit:

• The loss of a ship at sea.
• The substantial decline in world shipping markets.
• The threat of piracy at sea.
• Information technology system failure.

• The inability of customers to pay amounts owed for shipping

  services.

• Foreign exchange rate fluctuation risks.
• Breaching international shipping regulations.

• Failure to react to significant advances or changes in the

  shipping industry.

• Damage to or theft of cargo from containers while under control of Naval Shipping (Pty) Ltd.
• Loss of key staff throughout the company/ high staff turnover in the company.

REQUIRED

Match the risks listed above to the best recommended action that can be taken by management to mitigate the risk. (10)

QUESTION

You are currently busy with an internal audit

of the acquisition and expenditure cycle of your organisation. You are busy compiling an internal control questionnaire to assess the function. You have determined the following audit objectives:

a) To determine that no unauthorised goods are purchased.

b) To determine that no payments are made for goods not received.

c) To determine that all goods ordered and invoiced are received.

d) To determine that no goods are purchased for personal use.

e) To determine that source documentation is not used twice to request payment.

 REQUIRED

Match each of the audit engagement objectives to an appropriate internal control question that can be used in the internal control questionnaire. (5)

QUESTION

Komes Ltd, a medium sized retailer of solar lights has implemented the following control activities to address risks that they face in the various business cycles.

a) 

To gain access to the

warehouse, warehouse employees must place their thumb on a biometric reader. If

the thumbprint is authorised, the turnstile is activated.     

b) 

Inventory cycle

counts are conducted on different sections of the warehouse at the end of every

month.

c) 

To effect monthly

payments to creditors by electronic funds transfer, both the financial

accountant and the financial director must enter their unique passwords before

the payment will be transferred.

d) 

The purchase

application software will not produce a purchase order unless the order is made

out to a supplier on the approved supplier Masterfile.

REQUIRED

Match the internal control procedure to the relevant risk that it mitigates. (6)