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MODULE NAME: MODULE CODE:

BUSINESS CONTROLS BSCT6211

ASSESSMENT TYPE: EXAMINATION (PAPER ONLY)

TOTAL MARK ALLOCATION: 120 MARKS
TOTAL HOURS: 2 HOURS (+10 minutes reading time)
INSTRUCTIONS:
1. Please adhere to all instructions in the assessment booklet.
2. Independent work is required.
3. Five minutes per hour of the assessment to a maximum of 15 minutes is dedicated to
reading time before the start of the assessment. You may make notes on your question
paper, but not in your answer sheet. Calculators may not be used during reading time.
4. You may not leave the assessment venue during reading time, or during the first hour or
during the last 15 minutes of the assessment.
5. Ensure that your name is on all pieces of paper or books that you will be submitting. Submit
all the pages of this assessment’s question paper as well as your answer script.
6. Answer all the questions on the answer sheets or in answer booklets provided. The phrase
‘END OF PAPER’ will appear after the final set question of this assessment.
7. Remember to work at a steady pace so that you are able to complete the assessment within
the allocated time. Use the mark allocation as a guideline as to how much time to spend on
each section.
Additional instructions:
1. This is a CLOSED BOOK assessment.
2. Calculators are allowed.
3. For multiple-choice questions, give only one (1) response per question. The marker will
ignore any question with more than one answer, unless otherwise stated. You should,
therefore, be sure of your answer before committing it to paper.
4. Answer All Questions .
5. Show all calculations, where applicable (marks may be awarded for this).

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Exam Outcomes ____

At the end of this assessment, students should be able to:

• Demonstrate a basic understanding of the control environment within an entity

• Explain the internal and external auditing process.
• Discuss auditing procedures.

Question 1 (Marks: 30)

Q.1.1 Create a table, as per below, that defines the five key differences between an (15)
internal and external auditor:
Difference External Auditor Internal Auditor
E.g. Reporting Reports to Reports to

Q.1.2 Internal control is a combination of systems, policies and procedures that are used (10)
to mitigate business risks. The ISA 315 (Revised) identifies five components of
internal control that, when combined, make up the entity’s internal controls
process.
Describe these components in detail.

Q.1.3 Control activities are the policies and procedures that are put in place to help (5)
ensure that management directives are carried out appropriately. Control
activities vary in scope and can be applicable at either a functional or
organisational level.
Provide five types of control activities e.g., verifying the signatories of
documents.

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Question 2 (Marks: 30)

Q.2.1 Distinguish between general and application controls and provide three controls (10)
within each type.

Q.2.2 Assume that you are part of management and are required to implement ITGC`s (10)
(access controls) within the directorate, with focus on the security policies. Security
policies address and outline the security standards set by management and those
charged with governance, that employees need to follow and maintain to ensure
that the integrity of information systems is intact and uncompromised.

You are tasked with implementing the three important principles to be considered
in an entity’s security policy.
Provide the three principles and the importance thereof in the following table
format:
Principle Importance/ description
1.

Q.2.3 Assertions relate to what management, or those charged with governance, where (5)
applicable, are saying or representing to the users of the financial statements.
Assertions in respect of transactions and events and related disclosures relate to
five key aspects.
List these five aspects.

Q.2.4 Todd`s client’s revenue and receipts cycle is computerised, and you as the auditor (5)
have access to suitable audit software, as the audit of trade receivables can be
performed in a significantly more efficient manner, as the company has been asked
to reduce costs and now utilises audit software resulting in a significant reduction
in audit time and costs.
List five procedures you would use when auditing trade receivables in a
computerised environment.

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Question 3 (Marks: 25)

Q.3.1 An organisation’s acquisitions and payments cycle consist of activities that ensure (5)
that goods ordered from suppliers are received in good order, and that payments
to suppliers are made and authorised as they fall due.
List five of these six functions.

Q.3.2 An employee file contains all of the details that are pertinent to an employee’s (5)
employment at the organisation.
Describe the aspects that each employee file should contain.

Q.3.3 You are a Human Resources (HR) clerk at Ooopa, a laptop manufacturing company. (15)
The company is relatively new and is currently in the process of formalising its
internal processes, including the personnel function. You have been asked to
prepare a checklist for new employees, in tabular format. The checklist should
include:
• all of the details required in order to onboard a new employee; and
• any documentation required, as well as the person responsible for providing
the documentation.

Use the table below as a format:

Details required Documentation required Responsible person
E.g. Employee ID Certified copy of ID Employee – should be provided
to the HR office.

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Question 4 (Marks: 15)

Q.4.1 You have recently been assigned to Marvel (Pty) Ltd for the financial year ended 30 (15)
September 2022. The company rents out various types of high-quality movie
equipment at reasonable prices, and it has gained a substantial market share. In
2021, Founders was situated in Durban – its only outlet.

Finances acquired
Due to Marvel’s success, the directors decided that it was time to expand. A
decision was therefore taken to open up two new stores in Johannesburg and
Cape Town. The expansion was financed through a loan obtained from UN Bank
earlier in 2021.

The details of the loan agreement were as follows:

• Loan amount: R150 million.
• Interest rate: Prime plus two per cent, repayable quarterly.
• Repayment date: 30 September 2023.
• Security: The Durban property had been placed as security in the event that
company failed to repay the loan.
• Covenant: The credit provider had the option of recalling the loan at any date
after the first six months had lapsed.
• Date on which loan agreement was entered into: 1 June 2022.

Acquisitions made:
A total of 40 Cameras were imported from the US. The financial manager has
provided you with the following details in respect of these cameras:
• Cost: £5 000
• Depreciation method: Straight line
• Depreciation charge: 33.3 per cent per annum
• Shipment method: Free on-board shipping point
• Spot rate (transaction date): R8.75

A total of 13 cameras were still in transit at year end.

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Required:
Discuss the risks of material misstatement at assertion level that are evident in this
scenario. Your answer must be in tabular format, as follows:
Risk indicator Assertion affected Explanation

Question 5 (Marks: 20)

The following question is an essay question. Marks will be awarded for layout of a report, content
related to the case study and valid aspects (controls) related to the case.

You are called in as a counsel to James Book Store. The CAE is concerned that too many (and
excessively priced) purchase orders are being placed by various junior staff members for products
from suppliers that are so small that they are not even registered as a value-added tax (VAT) vendor.
The CAE asks you to recommend internal controls in order to ensure orders that are fairly priced
and are from reliable suppliers.

Required:
Write a report that sets out control weaknesses and controls that are needed for a well-controlled
purchase process.

END OF PAPER

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