AUI3701 ASSIGNMENT 2 SOLUTIONS 2023 S1
QUESTION 1
QUESTION 1 25 marks
The following situations occurred at Cyclone Ltd.
1.1. The internal audit activity has received a request from senior management to provide
advice and counsel regarding an upcoming merger transaction with another company.
The auditor in charge of this audit commenced with the planning of the engagement.
The internal audit charter does not make provision for the rendering of such services.
(5 marks)
1.2. The external auditors complained that Mrs Skosana, who has recently been appointed
as the chief audit executive (CAE), does not want to share information with them
regarding the audits performed by the internal audit activity during the recent year.
(5 marks)
1.3. The organisation has developed and implemented a new computerised system at one
of its branches. The branch manager has requested that the internal audit activity
participates in a team consisting of representatives from finance, human resources and
marketing. This team was responsible for the implementation effort. The CAE assigned
a senior internal auditor to the project to assist “as required”. After completion of the
project, the senior internal auditor assisted the branch manager as follows:
• Identifying and defining controls objectives for the new systems;
• Testing for compliance with system development standards;
• Reviewing the adequacy of systems and programming standards;
• Drafting operating procedures for the new system. (5 marks)
1.4. Thabiso has been experiencing difficulties in doing his current audits due to the
organisation being computerised and his lack of computer literacy skills. He enrolled for
a computer course three years earlier but due to his workload had to cancel it and did
not attempt the course again. (5 marks)
QUESTION 1
QUESTION 1 25 marks
The following situations occurred at Cyclone Ltd.
1.1. The internal audit activity has received a request from senior management to provide
advice and counsel regarding an upcoming merger transaction with another company.
The auditor in charge of this audit commenced with the planning of the engagement.
The internal audit charter does not make provision for the rendering of such services.
(5 marks)
1.2. The external auditors complained that Mrs Skosana, who has recently been appointed
as the chief audit executive (CAE), does not want to share information with them
regarding the audits performed by the internal audit activity during the recent year.
(5 marks)
1.3. The organisation has developed and implemented a new computerised system at one
of its branches. The branch manager has requested that the internal audit activity
participates in a team consisting of representatives from finance, human resources and
marketing. This team was responsible for the implementation effort. The CAE assigned
a senior internal auditor to the project to assist “as required”. After completion of the
project, the senior internal auditor assisted the branch manager as follows:
• Identifying and defining controls objectives for the new systems;
• Testing for compliance with system development standards;
• Reviewing the adequacy of systems and programming standards;
• Drafting operating procedures for the new system. (5 marks)
1.4. Thabiso has been experiencing difficulties in doing his current audits due to the
organisation being computerised and his lack of computer literacy skills. He enrolled for
a computer course three years earlier but due to his workload had to cancel it and did
not attempt the course again. (5 marks)
