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Write your name and postal address

below MANUEL

BOX 6647, Ausspanplatz


Student Number
Refer to Information
Manual for Distance

ID Number


Course e.g. Introduction to

Course Code e.g. ITM111S
Assignment Number
Lecturer/Tutors name Prof/Dr/Mr/Ms
Tel No:

Ms Akwenye

Due Date
Extended due date of assignment in case
of study material issued late

05 March 2014



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Gobabis Centre
KatimaMulilo Centre
Keetmanshoop Centre
Ongwediva Centre
Opuwo Centre
Otjiwarongo Centre
Outapi Centre
Rundu Centre
Tsumeb Centre
Walvis Bay Centre
Windhoek COLL Office

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Question 1
1. A bookkeeper - keeps a record of transactions in the business.
2. Financial Accountant - Prepares financial statements and prepares an analysis of
those statements
3. Management accountant - prepares costing and manufacturing type statements as
well as cost budgets
4. External Auditor - performs an audit in accordance with specific laws or rules on the
financial statements of a company, other legal entity, and is independent of the entity
being audited.
5. Internal Auditor - An employee of a company charged with providing independent and
objective evaluations of the company's financial and operational business activities,
including its corporate governance.
6. Government Auditor: Government auditors are considered a subset of internal
auditors, and are employed by federal, state, and local agencies.


Question 2
a. Objectivity
The principle of objectivity imposes the obligation on all professional accountants to be
fair, intellectually honest, and free of conflicts of interest.
b. Integrity
An auditor should have the quality of being honest and having strong moral principles.
c. Independence
It is having a position to take an unbiased viewpoint in the performance of audit tests,
analysis of results, and attestation in the audit report.
d. Confidentiality
Professional accountants have an obligation to respect the confidentiality of information
about a clients (or employers) affairs acquired in the course of professional services
e. Professional Competence and Due Care
A professional accountant, in agreeing to provide professional services, implies that he
is competent to perform the services. Professional competence requires a high standard
of general education followed by specific education.
Question 3
Internal Auditors

The deter fraud. When employees know that there is an internal auditor, they
lessen their likelihood to steal.

The community benefits from less people in prison

External Auditors

Provides the community with reasonable assurance about assertions made by

company directors

Enhance the community image by validating directors claims, if there are true

Question 4
a. Internal Auditor
A person who helps an organization accomplish its objectives by bringing a systematic,
disciplined approach to evaluate and improve the effectiveness of risk management,
control, and governance processes.
b. Forensic Auditor
A forensic auditor specializes within the field of accounting, and often provide expert
testimony during trial proceedings in order to prosecute a party for fraud, embezzlement
or other financial claims.
c. Postulates of Auditing
Postulates were the basis, the assumptions, and the starting point for building the
auditing structure and are matters which are assumed to be true and are taken for
d. Professional Scepticism
It is an attitude that includes a questioning mind, being alert to conditions which may
indicate possible misstatement due to error or fraud, and a critical assessment of audit
e. Reasonable Assurance
In most assurance services the audit conclusion is expressed in the positive form which
indicates that, given the evidence gathering procedures and the characteristics of the
subject matter, the auditor has obtained sufficient appropriate evidence.

Question 5
Due to the inherent limitations of audit, auditors are only able to offer 'reasonable
assurance' over the truth and fairness of the financial statements rather than absolute
assurance. Inherent limitations of audit are discussed below.
Use of Professional Judgment
Audit involves the use of judgment in the identification of audit risks, selection of
appropriate auditing procedures and the interpretation of audit evidence. Although
auditing standards provide guidelines to assist auditors in forming sound professional
judgments, it is inevitable that an auditor may at times misjudge a situation which may
cause the auditor to overlook a misstatement in the financial statement.
Use of Sampling
Auditors apply sampling techniques to limit the number of transactions and balances
selected for audit testing in order to perform the audit efficiently and cost effectively. The
results derived from the selected transactions and balances may not however be
representative of the entire population. There is therefore an inherent risk that the audit
procedures may fail to detect a material misstatement in the financial statements due to
the inability of auditors to perform detailed testing of the entire population of
transactions and balances.
Management Representations
Generally, external evidence is considered to be a more reliable form of audit evidence
than internal evidence produced by the management. Although auditors collect audit
evidence from a range of sources, too often they have to rely on the representations of
management in order to assess the reasonableness of the matters concerning financial
statements. This is particularly the case in matters that involve the use of judgment by
the management as it is usually difficult to corroborate management representations
about the appropriateness of their judgments with external evidence.

Risk of Fraud
By their very nature, frauds are intended to be concealed by the perpetrators and
therefore pose a very high risk of remaining undetected by the auditors even in spite of
the application of sound audit methodology and procedures.
Time Constraints
In practice, auditors face strict time constraints within which they have to provide their
opinion on the financial statements. Auditors tend to prioritize tasks that are essential for
the effective performance of the audit. In some cases, particularly where there is legal
requirement for companies to publish their financial reports within a certain time frame,
the auditors may, in a bid to meet the assignment deadlines, fail to consider an
important matter in the finalization of the audit report.
Independence Threats
Whereas the ethical guidelines issued by IFAC and other professional bodies attempt to
minimize the instances of loss of objectivity of auditors, certain level of conflicts of
interest are inevitable in practice. The perceived independence of an auditor is for
instance impaired where a client accounts for a significant portion of the revenue of the
audit firm.

Question 6
Assurance engagement means an engagement in which a practitioner expresses a
conclusion designed to enhance the degree of confidence of the intended users other
than the responsible party about the outcome of the evaluation or measurement of a
subject matter against criteria . This different from non-assurance engagements which
are not meant to express opinion about a subject matter.

Question 7
1. True
2. True
3. True
4. True
5. False
6. True
7. False
8. True
9. True
10. False

Question 8
Assertions are representations of management that are embodied in all financial
statement components or classifications. Specific audit objectives are developed in
each audit area to evaluate the appropriateness and reasonableness of relevant
financial statement assertions.
For classes of transactions and events:

Occurrence All transactions and events that have been recorded have occurred

and pertain to the entity.


Completeness All transactions and events that should have been recorded have

been recorded.

Accuracy Amounts and other data relating to recorded transactions and events

have been recorded appropriately.


Cutoff Transactions and events have been recorded in the correct accounting


ClassificationTransactions and events have been recorded in the proper


For account balances at the period end:


ExistenceAssets, liabilities and equity interests exist.


Rights and ObligationsThe entity holds or controls the rights to assets, and

liabilities are the obligations of the entity.


CompletenessAll assets, liabilities, and equity interests that should have been

recorded have been recorded.


Valuation and allocationAssets, liabilities, and equity interests are included in the

financial statements at appropriate amounts and any resulting valuation or allocation

adjustments are appropriately recorded.


For presentation and disclosure:


Occurrence and Rights and ObligationsDisclosed events and transactions have

occurred and pertain to the entity.


CompletenessAll disclosures that should have been included in the financial

statements have been included.


Classification and UnderstandabilityFinancial information is appropriately

presented and described and disclosures are clearly expressed.


Accuracy and ValuationFinancial and other information are disclosed fairly and at

appropriate amounts

Sufficiency is the measure of quantity of audit evidence i.e. the amount of evidence
obtained must be enough that it can be used and considered by the auditor. The
quantity of audit evidence required depends on the assessment of risk conducted by the
auditor. If the risk of material misstatement is high then higher quantity of audit evidence
is required to establish (confirm) by the application of audit procedures.
Appropriateness on the other hand is the measure of quality of audit evidence. Audit
evidence is said to be appropriate if it is relevant and reliable in the given set of
circumstances. However, the appropriateness of audit evidence is affected by the time,
source and the circumstances under which such evidence is obtained.