You are the manager of the audit of InvestProp (Pty) Ltd (IP). You are currently reviewing the finance and investment cycles for the financial year ending 31 March 2022. You have called the trainee on the audit to explain to you the assertions she will be testing relating to the following accounts: Interest received R145 462 Long-term liabilities R4 185 000 Her response was as follows: Interest received Rights IP has the right to receive interest because it issued a loan. Accrual Interest which is owed to IP at 31 March 2022 which has not yet been received and has been included in the balance of R145 462. Obligation Entities that paid the interest are obliged to do so because they entered into a contract. Valuation The amount of R145 462 is the correct amount of interest that has or should be paid to IP in respect of loans that they have issued. Long-term liabilities Occurrence The loans have already been received by IP i.e. they have occurred. Validity The loans are not illegal and have not been obtained from illegal sources such as loan sharks. Accuracy All details pertaining to the loan have been accurately disclosed in the financial statements. Transparency IP has declared all loans in its financial statements i.e. they are not hiding any amounts the company owes.

2.1 Briefly discuss whether the trainee has an adequate understanding of the assertions for Interest received and Long-term liabilities and explain your reasoning. (5 marks) 2.2 List the trainees assertion and indicate whether it is valid or not by justifying your answer. (10 marks) 2.3 List the correct assertions for Interest received and Long-term liabilities and explain what each assertion tests.