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Auditing 3B Assignment Guide

South Africa is experiencing a major corruption scandal related to COVID-19 relief efforts, with R5 billion of the R10.38 billion spent now under investigation. The president has ordered an investigation into allegations of corruption in government spending on fighting the coronavirus. His own spokesperson has taken leave due to allegations her husband received part of a R2.2 billion tender. Court papers reveal one politically connected individual made an 800% profit on PPE sold to the government, including buying disposal bags for 75c each and selling them to the health department for R7 each.

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Richemond Ngoma
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5 views6 pages

Auditing 3B Assignment Guide

South Africa is experiencing a major corruption scandal related to COVID-19 relief efforts, with R5 billion of the R10.38 billion spent now under investigation. The president has ordered an investigation into allegations of corruption in government spending on fighting the coronavirus. His own spokesperson has taken leave due to allegations her husband received part of a R2.2 billion tender. Court papers reveal one politically connected individual made an 800% profit on PPE sold to the government, including buying disposal bags for 75c each and selling them to the health department for R7 each.

Uploaded by

Richemond Ngoma
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

HET ASSIGNMENTS 2023

Qualification Title BCOM ACCOUNTING

SAQA NQF Module name Year of Module Semester Assignment


ID level study code number title

58004 Level 7 Compliance 3rd ADT 320/ Individual


Auditing 3B 420

DUE DATE:
TOTAL MARKS: 100 MARKS
PASS MARK: 50%
WEIGHTING: 15 % towards DP mark
DEVELOPER: V . CHENGETA

INSTRUCTIONS TO STUDENTS:

1. Read the following instructions carefully before answering the questions.


2. Your assignment should be typed – Arial font 12, 1.5 spacing.
3. Students must include the following:
3.1 Coversheet
3.2 Index
3.3 Introduction/background
3.4 Body
3.5 Conclusion/summary
3.6 Glossary of terms
3.7 Bibliography; (proof of research)
3.8 Copies of 2 articles
3.9 Summaries of other member’s presentations.
4. Use the Harvard method of referencing.
5. You must consult at least three different textbooks and preferably journals for adequate
referencing.
6. You are expected to communicate your own thoughts. Long theoretical arguments and
verbatim quotes from the text book will not earn any marks.
7. Technical requirements for assignments:
Assignments must be presented in the correct format.
8. Ensure that your name and the name of your Campus are clearly indicated on the cover
page of your assignment.
9. Keep photocopies of all assignments handed in.
10. Failure to adhere to the above will result in marks being deducted.
11. No group work may be done on an Individual Assignment.
12. Plagiarism and copying of assignments will result in the default mark 0% being awarded.
This is also a punishable offence, which will lead to a disciplinary action.

Auditing 3B Page 1 of 7 2023 Individual Assignment


Plagiarism and Copying

What is plagiarism?
Plagiarism is the use of other people's work without acknowledging the original work. Plagiarism is
stealing somebody’s intellectual property. It is pretending that someone else’s work is your own.
Committing plagiarism is unacceptable to Damelin, and will result in serious consequences for any person who
is found guilty of plagiarism.

How is plagiarism committed?


i) Cutting and pasting from electronic sources or copying from books, magazines, journals, etc.
content, diagrams, tables, phrases & quotations in one’s own document.
ii) Copying from the work of another student.
iii) Allowing a fellow student to copy your work.
iv) Using too many direct quotations
v) Rewriting someone else’s ideas in your own words (paraphrasing) without referencing the
source.

How can you avoid plagiarism?


• If you use any secondary sources from books or the Internet while completing your assignments,
you need to reference the original source, otherwise you will be accused of plagiarism and
disciplinary action will be taken against you by the College.
• Carefully and accurately acknowledge the source that you used to obtain information and ideas
from. As you read, write down the details of the sources. Supply a list of references at the end of your
essay, report or assignment.
• You may talk to other people to help you work through the assignment, as long as the work you
submit will be your own work and not an assignment completed for you by another person, or one
that you have copied from the learning material.
• You are not allowed to copy verbatim (word-for-word) from the learning material and submit this
as your own work. You are not allowed to use the same examples that have been used in the
learning material and submit this as your own work.

Declaration of Authenticity

A critical aspect of any assignment is authenticity. Because you are completing much of the work for the
assignments unsupervised, the examiner must be convinced that it is all your own work. For this reason, you
must complete the Declaration of Authenticity and have it counter-signed by your manager, mentor or lecturer.

The declaration of authenticity is a legal document, and if found that you have made a false
declaration, then not only will your results be declared null and void, but you could also have
criminal charges brought against you. It is not worth taking the risk!

Please complete the declaration of authenticity below for all assignments:

DECLARATION OF AUTHENTICITY

I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .........................
Full Name & Surname ID number

Hereby declare that the contents of this assignment are entirely my own work.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . ..........................
Signature Date

Auditing 3B Page 2 of 7 2023 Individual Assignment


QUESTION 1 (20 Marks)

1.1 Describe the relationship between internal audit and the audit committee. (20)

QUESTION 2 (30 Marks)

You have been appointed as a senior internal auditor of Golden Finance Co (Golden) and you busy planning the review of their
operations. Golden is a banking institution which provides a range of financial services including loans. You have been with the
company for only four months to date, and the company’s year-end is 30 September 2019. At the end of August, Golden’s financial
controller left and the new replacement is not due to start until approximately two months after the year end. The finance director,
who is the sister-in-law of the audit engagement partner, has asked if a member of the audit team that you are leading can be
seconded to their finance department for three months to act as the temporary financial controller. You are aware that a number
of the audit team members currently bank with Golden and two team members have significant loans owing to the company.

Their taxation department’s books are also not in order, as SARS has issued a warning for non-compliance in terms of their taxes.

They have been approached by the finance director to represent them in negotiations to resolve some outstanding issues with the
taxation authorities, for which the fees quoted are substantial. The finance director has informed the audit engagement team that
when the audit is complete, she would like the whole team to attend an evening watching the national football team play a match
followed by a luxury meal.

2.1 Identify and explain FIVE ethical threats which may affect the independence of the senior internal auditor. (15)

2.2 Explain how the threats might be reduced to an acceptable level. (15)

Auditing 3B Page 3 of 7 2023 Individual Assignment


QUESTION 3 (20 Marks)

South Africa‘s pandemic corruption scandal continues to grow, with R5bn of the R10.38bn spent in relief efforts now under
investigation, writes MedicalBrief. The South African parliament’s standing committee on public accounts says it is seriously
concerned about allegations of corruption relating to COVID-19 procurement and wants those implicated to be successfully
prosecuted in order to turn the tide of corruption in government.

President Cyril Ramaphosa has ordered the SIU to investigate allegations of corruption around the government’s spending towards
the fight against the coronavirus, including charges of impropriety in giving tenders. His own spokesperson Khusela Diko has taken
special leave amid allegations that her husband received part of a R2.2bn personal protective equipment tender awarded to 75
companies by the Gauteng Health Department.
A politically-connected operator named in the PPE scandal besetting the Gauteng Health Department made an 800% profit on
COVID-19 personal protective equipment he sold the government. This, notes the Sunday Times, is according to court papers
naming Thandisizwe Madzikane Diko – a family friend of Gauteng Health MEC Bandile Masuku and the husband of Ramaphosa’s
spokesperson – in detailed claims laid out by the Special Investigating Unit (SIU).

Among the unit’s claims is that the ‘extortionate’ mark-ups made by Diko’s “proxy” company included buying a million medical
disposal bags from a supplier for 75c each and selling them to the Health Department for R7 a piece.

It also details an alleged attempt to initiate a side deal with a medical manufacturer that would involve defrauding the Industrial
Development Corporation (IDC). The SIU obtained an order freezing about R36m worth of assets that it said are the proceeds of
corrupt COVID-19 PPE contracts between the proxy company, Ledla Structural Development, and the Gauteng Health Department.

In court papers, investigator Asashanduki Rabali describes how the SIU came to conclude that:
* The COVID-19 contracts originally awarded to Diko’s company, Royal Bhaca, had been irregular and unlawful.
* Ledla was then used as a proxy for Royal Bhaca.
* The prices for crucial COVID-19 protective equipment were massively inflated.
* The department later tried to disguise a contract as a donation.

“The MEC wants his people”. That, according to court papers, is what a department official claims in an affidavit she was told when
she questioned why Diko – the senior traditional leader of the AmaBhaca – was being invited to tender. Khusela Diko and Masuku’s
wife, Johannesburg’s MMC of group corporate and shared services, Loyiso Masuku, are personal friends. Diko and Masuku have
both taken leave due to the scandal.

The interim freezing order was obtained in the Special Tribunal in the absence of those implicated, notes the Sunday Times report.
They will have a chance to tell the court their side of the story in October when the court will decide whether to make the order a
final and permanent one.

In papers, Rabali says that, in the wake of The Sunday Independent reports about the awarding of the PPE contracts to Royal
Bhaca, the Dikos told the newspaper the contract had been cancelled. This was true, she said, but a fresh contract was awarded
to Ledla “simply as a stratagem to make the false representation that Royal Bhaca was no longer contracted to (the Health
Department). Payments were then made by (the department) to Ledla instead of Royal Bhaca. Ledla was in fact a proxy for Mr
Diko and/or Royal Bhaca and the payments that were made to Ledla were in fact payments made for the benefit of Mr Diko and
Royal Bhaca,” said Rabali. She noted the two contracts were “almost identical”, with items and quantities that were “exactly the
same”.
(Extract from Medical Brief: 26th August 2020)

Auditing 3B Page 4 of 7 2023 Individual Assignment


3.1 Critically evaluate and discuss the deficiencies in the governance structure of the Government’s Supply (10)
Chain Processes.
3.2 As a newly appointed internal auditor, how can you improve Compliance with Policies and Regulations in (10)
order to safeguard Public Funds from being embezzled.

QUESTION 4 (30 Marks)

The case between Passenger Rail Agency of South Africa (PRASA) and Siyangena Technologies will not be referred to trial. But
the PRASA officials accused of corruption in PRASA’s founding affidavit will be allowed to submit affidavits to the court in
response to the allegations.

This was in the order handed down by Judge Billy Mothle, Judge Wendy Hughes and Judge Cornelius van der Westhuizen in the
Pretoria High Court on Friday morning.

Siyangena, an information technology and security company, was hired in 2010 under PRASA’s former Chief Executive Officer
Lucky Montana to improve integrated access security systems at railway stations. PRASA applied to the court to
get Siyangena’s contract set aside in March 2018. Commuter activist group # Unite Behind has since joined the case as a
friend of the court. The organisation wants Siyangena to be ordered to repay the money it has received, as well as for the
contract to be nixed.

In an affidavit submitted to the court, PRASA said Siyangena had been awarded lucrative deals without following proper tender
procedures. Siyangena had installed outdated, overpriced and ineffective security systems and because of this, the contract
should be set aside, PRASA argued.

According to #UniteBehind, Siyangena’s tenders amounted to about R4.5 billion.

But the judges said the court could not continue with the case because PRASA’s submissions implicated its own officials who
were not represented in court. They said those former employees needed to be given an opportunity to present their case in the
interest of justice.

Employees implicated included Montana, former project manager Luyanda Gantsho, former chief procurement officer Chris
Mbatha, former senior manager in supply chain management Maishe Bopape, former company secretary Tumi Mohube, former
chief procurement officer Joseph Phungula and others.

The judges said the case will be postponed until everyone had been given a chance to respond to the allegations. They said all
counsels needed to tell the court when they would be available so that the case could continue.

In the meantime, all the implicated people will be notified of the proceedings within ten days.

4.1 Outline and discuss the challenges faced by the PRASA in relation to the case study. (15)

4.2 Explain the controls that you would implement to mitigate against the identified challenges. (10)
Note: Prepare your answer using two columns headed Control deficiency and Control recommendation
respectively.

Auditing 3B Page 5 of 7 2023 Individual Assignment


4.3 If you were employed as an internal auditor in PRASA, how would you respond to the aforementioned (05)
corrupt activities?

Auditing 3B Page 6 of 7 2023 Individual Assignment

Common questions

Powered by AI

Internal audit plays a critical role in promoting ethical standards through regular audits that assess compliance with ethical guidelines, providing training on ethical conduct, and identifying potential ethical risks. By reporting findings to the audit committee and recommending corrective actions, the internal audit function helps maintain ethical integrity and mitigate risks associated with unethical behavior in financial institutions .

Five ethical threats that may affect a senior internal auditor's independence include the familiarity threat, self-interest threat, intimidation threat, advocacy threat, and self-review threat. To mitigate these threats, measures such as implementing rotation of audit team members, setting clear policies against accepting gifts or incentives, ensuring robust internal controls, and segregating duties can help reduce risks to an acceptable level. Additionally, reinforcing a culture of ethical compliance and conducting regular training on ethical standards could further minimize these threats .

Internal auditors can improve compliance by establishing clear policies and standard operating procedures, conducting regular compliance audits, and ensuring robust training programs for staff on ethical practices. Additionally, designing effective internal controls and promoting a culture of transparency and accountability within government agencies can help safeguard public funds from being embezzled .

Using the Harvard method of referencing in academic assignments is significant as it ensures proper attribution to original sources, thereby upholding academic integrity. This method also provides clarity and traceability of information, allowing readers to verify sources independently. Adopting a consistent referencing style promotes uniformity and scholarly rigor in academic writing .

South Africa's government supply chain processes suffer from deficiencies such as lack of transparency, inadequate oversight mechanisms, and ineffective controls, as highlighted by the PPE corruption scandal. These weaknesses lead to inflated pricing, misallocation of resources, and increased susceptibility to fraud and corruption—ultimately undermining operational effectiveness and public trust .

Potential conflicts of interest arise when audit team members have financial dealings, such as loans or banking relationships, with an audited client. These conflicts can impair objectivity and independence, creating a risk of biased judgment. To mitigate such conflicts, audit firms must enforce strict policies on personal financial dealings and consider rotating team members to avoid partiality .

Measures to avoid plagiarism include proper citation of sources, paraphrasing effectively while retaining the original meaning, and using plagiarism detection software to check work before submission. These measures are important as they maintain the integrity of academic work, respect intellectual property, and prevent the academic and legal repercussions associated with plagiarism .

The relationship between internal audit and the audit committee enhances corporate governance by providing independent oversight and ensuring that financial reporting and internal controls are effective. This relationship allows audit committees to receive timely insights into risk management and internal control deficiencies, thereby facilitating informed decision-making and accountability within the organization .

The PRASA case highlighted challenges such as non-adherence to tender procedures, installation of ineffective systems, and undue influence in procurement decisions. To address these, controls like enhancing transparency in procurement processes, conducting regular audits, implementing stringent vendor vetting procedures, and establishing an independent oversight committee can be recommended .

Failing to declare the authenticity of an assignment in an academic setting can lead to significant consequences including nullification of results, potential disciplinary action, and damage to one's academic reputation. It may also lead to criminal charges if false declarations are made, emphasizing the importance of maintaining academic integrity .

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