You are the audit manager of the audit of Felix (Pty) Ltd. You are currently reviewing the working papers for Accounts Receivable and Repairs and Maintenance for the financial year ending 31 December 2022. You have called the trainee on the audit to explain to you the assertions she will be testing relating to the following accounts:

Repairs and Maintenance R3 575 058 Accounts Receivable R25 185 300

Her response was as follows:

Repairs and Maintenance

Occurrence Validity

Valuation Transparency

Completeness Usefulness

Repairs and Maintenance were done i.e., they have occurred.

Repairs and Maintenance are accounted for at the right amount in the right account.

The amount of Repairs and Maintenance is valued at the correct amount. Felix (Pty) Ltd has declared all Repairs and Maintenance in its financial statements.

All the above assertions have been dealt with.

The repairs and maintenance are useful to Felix (Pty) Ltd.

Accounts Receivable

Rights Reliability Accrual Obligation Accuracy

Completeness

Felix (Pty) Ltd has the right to receive the accounts that are receivable. The account balance for Accounts Receivable is reliable.

The accounts that are receivable accrued to Felix (Pty) Ltd.

The debtors have an obligation to pay the accounts of Felix (Pty) Ltd.

All details pertaining to Accounts Receivable has been accurately disclosed in the financial statements.

All the above assertions have been dealt with.

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HAUD230-1-Jul-Dec2023-FA2-MK-V3-21072023

ANNEXURE I : FORMATIVE ASSESSMENT 2

REQUIRED:

1.1 Discuss the trainees assertions for Repairs and Maintenance and indicate whether it is valid or not by justifying your answer.

Use the following table to present your answer:

Assertion Valid/Not valid Reason

(6 x 2 marks)

1.2 Discuss the trainees assertions for Accounts Receivable and indicate whether it is valid or not by justifying your answer.

Use the following table to present your answer:

Assertion Valid/Not valid Reason

(6 x 2 marks)

1.3 Conclude whether the trainee has an adequate understanding of the assertions for Repairs and Maintenance and Accounts Receivable based on your determination in 1.1 and 1.2.

(6 marks)

1.4 Provide the correct assertions applicable to Repairs and Maintenance and explain what each assertion tests.

(10 marks)

1.5 Provide the correct assertions applicable to Accounts Receivable and explain what each assertion tests.

(10 marks)