, HELPFUL
AUDITING NOTES
FOR SOUTH
AFRICAN
STUDENTS
10TH EDITION LATEST VERSION
DON'T MISS OUT ON THIS ONE
JACKSON AND STENT
, PREFACE TO THE TENTH EDITION
This tenth edition of the book has been compiled specifically to assist students at tertiary institutions in South Africa
with their studies in auditing. The book is not designed to be used on its own and will work best when used in
conjunction with the Companies Act 2008 and its Regulations 2011, the International Standards on Auditing and the
(SAICA) Code of Professional Conduct as well as the King IV Report on Corporate Governance for South
Africa. Extensive reference is made to these and other pronouncements.
The major changes to the ninth edition are that Chapter 4 – Corporate Governance has been completely re-written to
accommodate the publication of the King IV Report on Corporate Governance for South Africa 2016 and that
Chapter 18 – The Audit Report has also been completely re-written to accommodate the revision of a number of
reporting statements and the issue of entirely new reporting statement ISA 701 – Communicating Key Audit Matters
in the Independent Auditor’s Report (effective for audits of financial statements for periods ending on or after
15 December 2016.
Chapter 15 – Going Concern has also been revised to accommodate important changes in ISA 570 (Revised) –
Going Concern which is also relevant for audits of financial statements for periods ending on or after 15
December 2016.
Changes have also been made to a number of chapters to accommodate the “conforming amendments” arising out of
the Disclosures project and the Auditor Reporting project. Perhaps the most far reaching of the conforming
amendments, besides the increased emphasis on disclosure, are the changes to the definition/description of the
financial statement assertions. Formally divided into three categories, they are now presented in two categories with
the former “presentation and disclosure” assertions being merged into the transaction and events, and account
balance assertions.
Our intention has been to ‘simplify’ what has proved to be a difficult subject for many generations of auditing
students. We hope that we have achieved this. Any comments or suggestions to improve subsequent editions would
be most welcome, especially from students who use the book.
R D C Jackson B.Acc (Natal), M.Com (Rhodes), CA(SA)
Former Professor in the School of Accounting, University of KwaZulu-Natal, Durban.
W J Stent B.Com (Hons) (Rhodes), M.Com (RAU), HDE (Rhodes), PhD (Massey), CA(SA), CISA.
Former Senior Lecturer in the School of Accounting, University of KwaZulu-Natal,
Durban.
Copyright subsists in this work. No part of this work may be reproduced in any form or by any means without
the publisher’s written permission. Any unauthorised reproduction of this work will constitute a copyright
infringement and render the doer liable under both civil and criminal law.
© 2016 LexisNexis
215 North Ridge Road
Morningside, Durban 4001
www.lexisnexis.co.za
Telephone: 031 2683111
ISBN softcover 978 0 409 12460 6
e-book 978 0 409 12478 1
, CONTENTS
Please see the end of the book for detailed chapter by chapter index
Chapter 1 Introduction to Auditing 1/1 - 1/24
Chapter 2 Professional Conduct 2/1 - 2/53
Chapter 3 Statutory Matters 3/1 - 3/93
* Companies Act 2008 and Regulations
* Close Corporations Act 1984
* Auditing Profession Act 2005
Chapter 4 Corporate Governance 4/1 - 4/66
Chapter 5 General Principles of Auditing 5/1 - 5/34
* Internal control
* Audit evidence
* The auditor’s toolbox
* Audit sampling
Chapter 6 An Overview of the Audit Process 6/1 - 6/25
Chapter 7 Important Elements of the Audit Process 7/1 - 7/46
* Understanding Audit Risk
* Understanding the Entity and its environment
* The concept of materiality
* The auditor’s responsibilities relating to fraud
Chapter 8 Computer Audit - The Basics 8/1 - 8/50
Chapter 9 Computer Audit - Networks and Related Concepts 9/1 - 9/35
Chapter 10 Revenue and Receipts Cycle 10/1 - 10/73
Chapter 11 Acquisitions and Payments Cycle 11/1 - 11/53
Chapter 12 Inventory and Production Cycle 12/1 - 12/29
Chapter 13 Payroll and Personnel Cycle 13/1 - 13/43
Chapter 14 Finance and Investment Cycle 14/1 - 14/31
Chapter 15 Going Concern and Factual Insolvency 15/1 - 15/17
Chapter 16 Reliance on Other Parties 16/1 - 16/12
Chapter 17 Sundry Topics 17/1 - 17/26
AUDITING NOTES
FOR SOUTH
AFRICAN
STUDENTS
10TH EDITION LATEST VERSION
DON'T MISS OUT ON THIS ONE
JACKSON AND STENT
, PREFACE TO THE TENTH EDITION
This tenth edition of the book has been compiled specifically to assist students at tertiary institutions in South Africa
with their studies in auditing. The book is not designed to be used on its own and will work best when used in
conjunction with the Companies Act 2008 and its Regulations 2011, the International Standards on Auditing and the
(SAICA) Code of Professional Conduct as well as the King IV Report on Corporate Governance for South
Africa. Extensive reference is made to these and other pronouncements.
The major changes to the ninth edition are that Chapter 4 – Corporate Governance has been completely re-written to
accommodate the publication of the King IV Report on Corporate Governance for South Africa 2016 and that
Chapter 18 – The Audit Report has also been completely re-written to accommodate the revision of a number of
reporting statements and the issue of entirely new reporting statement ISA 701 – Communicating Key Audit Matters
in the Independent Auditor’s Report (effective for audits of financial statements for periods ending on or after
15 December 2016.
Chapter 15 – Going Concern has also been revised to accommodate important changes in ISA 570 (Revised) –
Going Concern which is also relevant for audits of financial statements for periods ending on or after 15
December 2016.
Changes have also been made to a number of chapters to accommodate the “conforming amendments” arising out of
the Disclosures project and the Auditor Reporting project. Perhaps the most far reaching of the conforming
amendments, besides the increased emphasis on disclosure, are the changes to the definition/description of the
financial statement assertions. Formally divided into three categories, they are now presented in two categories with
the former “presentation and disclosure” assertions being merged into the transaction and events, and account
balance assertions.
Our intention has been to ‘simplify’ what has proved to be a difficult subject for many generations of auditing
students. We hope that we have achieved this. Any comments or suggestions to improve subsequent editions would
be most welcome, especially from students who use the book.
R D C Jackson B.Acc (Natal), M.Com (Rhodes), CA(SA)
Former Professor in the School of Accounting, University of KwaZulu-Natal, Durban.
W J Stent B.Com (Hons) (Rhodes), M.Com (RAU), HDE (Rhodes), PhD (Massey), CA(SA), CISA.
Former Senior Lecturer in the School of Accounting, University of KwaZulu-Natal,
Durban.
Copyright subsists in this work. No part of this work may be reproduced in any form or by any means without
the publisher’s written permission. Any unauthorised reproduction of this work will constitute a copyright
infringement and render the doer liable under both civil and criminal law.
© 2016 LexisNexis
215 North Ridge Road
Morningside, Durban 4001
www.lexisnexis.co.za
Telephone: 031 2683111
ISBN softcover 978 0 409 12460 6
e-book 978 0 409 12478 1
, CONTENTS
Please see the end of the book for detailed chapter by chapter index
Chapter 1 Introduction to Auditing 1/1 - 1/24
Chapter 2 Professional Conduct 2/1 - 2/53
Chapter 3 Statutory Matters 3/1 - 3/93
* Companies Act 2008 and Regulations
* Close Corporations Act 1984
* Auditing Profession Act 2005
Chapter 4 Corporate Governance 4/1 - 4/66
Chapter 5 General Principles of Auditing 5/1 - 5/34
* Internal control
* Audit evidence
* The auditor’s toolbox
* Audit sampling
Chapter 6 An Overview of the Audit Process 6/1 - 6/25
Chapter 7 Important Elements of the Audit Process 7/1 - 7/46
* Understanding Audit Risk
* Understanding the Entity and its environment
* The concept of materiality
* The auditor’s responsibilities relating to fraud
Chapter 8 Computer Audit - The Basics 8/1 - 8/50
Chapter 9 Computer Audit - Networks and Related Concepts 9/1 - 9/35
Chapter 10 Revenue and Receipts Cycle 10/1 - 10/73
Chapter 11 Acquisitions and Payments Cycle 11/1 - 11/53
Chapter 12 Inventory and Production Cycle 12/1 - 12/29
Chapter 13 Payroll and Personnel Cycle 13/1 - 13/43
Chapter 14 Finance and Investment Cycle 14/1 - 14/31
Chapter 15 Going Concern and Factual Insolvency 15/1 - 15/17
Chapter 16 Reliance on Other Parties 16/1 - 16/12
Chapter 17 Sundry Topics 17/1 - 17/26
