⋆
]]
⋆
AUI3703: The Internal Audit Process
Specific Engagements and Reporting
May/June Examination 2026 · Covering Papers from 2023 to 2025
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
[ Internal Auditing – Department of Auditing (UNISA) [
_ Exam Revision Guide
AUI3703
Module Code:
The Internal Audit Process: Specific Engagements and Reporting
Module Name:
May/June 2023, May/June 2024, May/June 2025
Papers Covered:
May/June 2026
Exam Prepared
For:
100 marks
Total Marks (ea.):
University of South Africa (UNISA)
Institution:
Study for understanding – not just memorisation. Work through every question
carefully.
Exam Revision Notes | AUI3703 | 2023–2025
,AUI3703 | Exam Revision Guide May/June Examination 2026
PART 1: MAY/JUNE 2023 EXAMINATION PAPER
Full Q&A Revision – AUI3703 (100 Marks)
Page 2 of 44
,AUI3703 | Exam Revision Guide May/June Examination 2026
Question 1 [25 marks]
(a) [10 marks]
Question: You are an internal auditor assigned to audit the acquisition and expenditure
cycle of Themba Retailers (Pty) Ltd. The following describes the company’s current system:
Purchases are initiated verbally by department heads when stock runs low. The warehouse
manager then issues a handwritten purchase order which is sent to suppliers by fax. Goods re-
ceived are captured by the receiving clerk on a spreadsheet, but delivery notes are not matched
to purchase orders. Supplier invoices are captured by the accounts payable clerk directly into
the accounting system without any supervisory approval. Payment to suppliers is made via
internet banking by the financial director, who also authorises new suppliers on the system.
REQUIRED:
1.1 Identify and list six (6) strengths in the acquisition and expenditure cycle described above.
(6)
1.2 Describe eight (8) weaknesses in the above system. (8)
1.3 For each weakness described in 1.2, compile an appropriate recommendation to address
the weakness. (8) [Total: 22 marks, communication: 3 marks]
Answer: 1.1 Strengths (6 marks – 1 mark each)
That said, it’s easy to focus only on weaknesses. There are genuine strengths here too:
1. The financial director makes payments via internet banking – this provides an electronic
audit trail of all outgoing payments.
2. The financial director handles supplier payments personally – a senior, accountable
individual controls the cash disbursement function.
3. Goods received are captured on a spreadsheet – some form of receipt recording exists,
which supports reconciliation.
4. Purchase orders are issued in writing by the warehouse manager – there is a document
trail for procurement (even if the PO is handwritten).
5. Supplier invoices are captured into an accounting system – a computerised system is
used, providing some level of record integrity.
6. A specific person (accounts payable clerk) is responsible for capturing invoices – there is
a segregation of the capturing function from the payment function.
Page 3 of 44
, AUI3703 | Exam Revision Guide May/June Examination 2026
⋆ Exam Tip
Examiners often expect 1 clear, specific point per mark. Avoid vague statements like
“there is control” – name the control and why it’s a strength.
1.2 Weaknesses (8 marks – 1 mark each)
1. Purchases are initiated verbally – no written authorisation or requisition exists. Anyone
could request a purchase without traceable approval.
2. Purchase orders are handwritten and unnumbered – there is no sequence control,
making it impossible to detect missing or duplicate orders.
3. Delivery notes are not matched to purchase orders – goods could be received for
items never ordered, enabling theft or ghost deliveries.
4. The receiving clerk captures receipts on a standalone spreadsheet – this is not inte-
grated with the accounting system, creating reconciliation gaps.
5. Supplier invoices are captured without supervisory approval – erroneous or fictitious
invoices could be paid without detection.
6. The financial director both authorises new suppliers and makes payments – this is
a serious segregation of duties failure; he could add a fictitious supplier and pay it.
7. There is no three-way matching (purchase order, goods received note, invoice) before
payment – overpayments and fraudulent invoices could go undetected.
8. The goods received spreadsheet is not linked to purchase orders or invoices –
completeness cannot be verified; goods could be received and not billed.
1.3 Recommendations (8 marks – 1 mark each)
1. Re: Verbal requests – Implement a written, authorised purchase requisition sys-
tem. Each request must be signed by the relevant department head and approved by a
supervisor before procurement.
2. Re: Unnumbered POs – Introduce pre-numbered, sequentially controlled purchase
orders. Gaps in the sequence should be investigated.
3. Re: No delivery matching – Require the receiving clerk to match all deliveries
against the original purchase order before capturing the receipt.
4. Re: Standalone spreadsheet – Integrate goods received notes into the account-
ing/ERP system so receipt data flows automatically to accounts payable.
5. Re: No approval on invoices – Implement a supervisory approval step (e.g. accounts
Page 4 of 44
]]
⋆
AUI3703: The Internal Audit Process
Specific Engagements and Reporting
May/June Examination 2026 · Covering Papers from 2023 to 2025
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
[ Internal Auditing – Department of Auditing (UNISA) [
_ Exam Revision Guide
AUI3703
Module Code:
The Internal Audit Process: Specific Engagements and Reporting
Module Name:
May/June 2023, May/June 2024, May/June 2025
Papers Covered:
May/June 2026
Exam Prepared
For:
100 marks
Total Marks (ea.):
University of South Africa (UNISA)
Institution:
Study for understanding – not just memorisation. Work through every question
carefully.
Exam Revision Notes | AUI3703 | 2023–2025
,AUI3703 | Exam Revision Guide May/June Examination 2026
PART 1: MAY/JUNE 2023 EXAMINATION PAPER
Full Q&A Revision – AUI3703 (100 Marks)
Page 2 of 44
,AUI3703 | Exam Revision Guide May/June Examination 2026
Question 1 [25 marks]
(a) [10 marks]
Question: You are an internal auditor assigned to audit the acquisition and expenditure
cycle of Themba Retailers (Pty) Ltd. The following describes the company’s current system:
Purchases are initiated verbally by department heads when stock runs low. The warehouse
manager then issues a handwritten purchase order which is sent to suppliers by fax. Goods re-
ceived are captured by the receiving clerk on a spreadsheet, but delivery notes are not matched
to purchase orders. Supplier invoices are captured by the accounts payable clerk directly into
the accounting system without any supervisory approval. Payment to suppliers is made via
internet banking by the financial director, who also authorises new suppliers on the system.
REQUIRED:
1.1 Identify and list six (6) strengths in the acquisition and expenditure cycle described above.
(6)
1.2 Describe eight (8) weaknesses in the above system. (8)
1.3 For each weakness described in 1.2, compile an appropriate recommendation to address
the weakness. (8) [Total: 22 marks, communication: 3 marks]
Answer: 1.1 Strengths (6 marks – 1 mark each)
That said, it’s easy to focus only on weaknesses. There are genuine strengths here too:
1. The financial director makes payments via internet banking – this provides an electronic
audit trail of all outgoing payments.
2. The financial director handles supplier payments personally – a senior, accountable
individual controls the cash disbursement function.
3. Goods received are captured on a spreadsheet – some form of receipt recording exists,
which supports reconciliation.
4. Purchase orders are issued in writing by the warehouse manager – there is a document
trail for procurement (even if the PO is handwritten).
5. Supplier invoices are captured into an accounting system – a computerised system is
used, providing some level of record integrity.
6. A specific person (accounts payable clerk) is responsible for capturing invoices – there is
a segregation of the capturing function from the payment function.
Page 3 of 44
, AUI3703 | Exam Revision Guide May/June Examination 2026
⋆ Exam Tip
Examiners often expect 1 clear, specific point per mark. Avoid vague statements like
“there is control” – name the control and why it’s a strength.
1.2 Weaknesses (8 marks – 1 mark each)
1. Purchases are initiated verbally – no written authorisation or requisition exists. Anyone
could request a purchase without traceable approval.
2. Purchase orders are handwritten and unnumbered – there is no sequence control,
making it impossible to detect missing or duplicate orders.
3. Delivery notes are not matched to purchase orders – goods could be received for
items never ordered, enabling theft or ghost deliveries.
4. The receiving clerk captures receipts on a standalone spreadsheet – this is not inte-
grated with the accounting system, creating reconciliation gaps.
5. Supplier invoices are captured without supervisory approval – erroneous or fictitious
invoices could be paid without detection.
6. The financial director both authorises new suppliers and makes payments – this is
a serious segregation of duties failure; he could add a fictitious supplier and pay it.
7. There is no three-way matching (purchase order, goods received note, invoice) before
payment – overpayments and fraudulent invoices could go undetected.
8. The goods received spreadsheet is not linked to purchase orders or invoices –
completeness cannot be verified; goods could be received and not billed.
1.3 Recommendations (8 marks – 1 mark each)
1. Re: Verbal requests – Implement a written, authorised purchase requisition sys-
tem. Each request must be signed by the relevant department head and approved by a
supervisor before procurement.
2. Re: Unnumbered POs – Introduce pre-numbered, sequentially controlled purchase
orders. Gaps in the sequence should be investigated.
3. Re: No delivery matching – Require the receiving clerk to match all deliveries
against the original purchase order before capturing the receipt.
4. Re: Standalone spreadsheet – Integrate goods received notes into the account-
ing/ERP system so receipt data flows automatically to accounts payable.
5. Re: No approval on invoices – Implement a supervisory approval step (e.g. accounts
Page 4 of 44
