Final Assessment Preparation Lecture

Governance and Control 2024

15 & 16 October 2024

Final Assessment information
Date: 29 October 2024
Time: 12:30 – 15:30 (3 hours reading and writing time)
Venue:
• GOC3AB0 – as per your timetable on Moodle.
• There are 2 venues (D3 Lab 401 & D Lab Basement K01);
• ADIA003 & S3PACQ2 – D Lab Basement K03
Marks: 120 marks
Scope: Unit 10 - 15
• Companies Act;
• King IV;
• PFMA;
• Ethics;
• Internal Auditing; and
• Closed Corporation Act.
Final Assessment Admin
• You need a minimum year mark of 40% in order to gain entry into the final assessment;
• The year marks will be released next week, we will post an announcement when the year
marks have been released.
• You need a final mark of 50% to pass this module.
• The final mark will be calculated based on the 60/40 rule, thus which ever mark is the
highest between your year mark and final assessment mark will contribute 60% and the
lowest 40%.
How do you prepare for this assessment?
1. You have to study and understand your THEORY!!!!!!
2. Theory is very important for legislation, codes and standards if you do not know the
theory you will not be able to identify the issues from the scenario or apply the theory to
the given scenario;
3. You will not be able finish your assessment within 3 hours if you did not study your
theory;
4. You have to do a lot of questions;
• Don’t let the test be the first time you see a question;
5. Study continuously – you cannot study 2 days before the time (this goes for ALL the
subjects);
6. Plan ahead…work on a study timetable;
7. Stick to the timetable…AND…
8. We are here for you thus CONSULT if necessary!!!! 4
 Exam technique:
• Read your scenario and make notes as you read. Start identifying which module is
applicable (Ethics, Co’s Act, King, PFMA, Internal Auditing or CC Act);
• Take different color highlighters to the exam venue and highlight information relevant to
each module in a different color.
• If you use the time to read and highlight your scenario carefully it will assist in answering
the required.
• Read the required carefully to ensure you understand what is required.
• Answer ONLY the required. Do not make assumptions.
• Use the formats provided (table formats and headings, State, define, apply and
concluded).
• Stick to your time – NB!! Calculate the amount of time you have per question and stick to
that time.
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ETHICS
 Ethics
• IFAC:
• Threats
• Safeguards

• SAIPA:
• Advertisements;
• Tax services;
• Fees;
• Charging lower fees
• Commissions;
• Conflict resolution;
• Clients' funds

• BONUS: Information discusses in class about gifts you receive.

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KING IV
KING IV: important admin

1. King IV is answered in table format.

Concerns in terms of King IV Recommendations in terms of King IV

2. You need to know your theory VERY well in order to be able to identify the concerns from the scenario.
3. Why concerns? King IV is not legislation and recommended to organisations for application. Only listed entities MUST.
4. Common mistakes:
• Students do not explain the concern in detail. E.g.:
• of King IV The company is listed on the JSE According to King IV all listed entities
should adhere to the King IV Code.
• Recommendations in terms of King IV
The company is listed on the JSE and According to King IV all listed entities
is not adhering to the King IV code. should adhere to the King IV Code.
• Concerns in terms of King IV
• Recommendations in terms of King IV
5. King IV and Companies Act have a lot in common – so remember that some companies act can affect the King IV solution and
vice versa.

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 KING IV: Exam technique

• Yes – it is a lot, but I have scoped out a lot!!!

• Thus, you need to start studying ASAP!
• Make your study timetable and stick to it!!
• Study the theory and UNDERSTAND the theory. You will struggle with application if
you do not understand.
• Do not only use the question banks and the past papers to study. We set NEW
papers every year. You have to study!

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Summary on a page:

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Important principles:
• Principle 5: Issuing of reports,
• Principle 7: Composition of the board,
• Principle 8: Committees,
• Principle 10: CEO and company secretary,
• Principle 11: Governance of risk management,
• Principle 16: Stakeholder inclusive approach.

• You MUST study ALL the theory in each of these principles. If you don’t, then you will not get
the marks in the King IV question. Students are not studying the theory, and therefore
cannot apply King IV!

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PFMA
PFMA: important admin
1. PFMA is answered in the following format (4 STEPS):
• STATE, DEFINE, APPLY, CONCLUDE

STATE:

Where do I get this?

In the scenario – this is a SHORT statement as to WHAT the issue is at hand
Usually, 1 or 2 marks.

DEFINE:

This is from your SLIDES/MODULE/ACT.

This is where you write down the ACT as you studied it.
APPLY:

This is where you APPLY to the scenario.

NOTE: Step 2 and 3 can be done together:
E.g.: Fruitless and wasteful expenditure is not allowed (DEFINE)
APPLY: The CEO was found guilty of fruitless and wasteful expenditure.

CONCLUDE:

Here you conclude. Short and to the point. Usually for 1 – 2 marks.
Based on the above, the AO is guilty of contravening section XX of the PFMA. He/she is thus guilty of financial misconduct.

This is done for EVERY section. Thus S 50, 51, 14

57 – every one that has a contravention.
 What is the thinking process to follow in a PFMA question?

Scenario in the test:

You can have one, OR Employees/officials Acc Authority

both in a test:
(S 56,57) (S 50, 51)

Compare
to S83

This is only discussed if I ask

you to discuss the If there is Financial
consequences.:
Misconduct = Look at
S83/86, and TR 33.

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 Important sections:
Section 50 – Accounting authority fiduciary duties
Section 51 – Accounting authority responsibilities
Section 52 – Corporate plan / annual budget
Section 53 – Strategic plan / annual budget
Section 55 – Annual report and financial statements
Section 57 – Delegated Authority
Section 86 – Defines the penalties.
TR 33 – Explains the process to be followed when there is financial misconduct.

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Companies Act
Companies Act:
• Please make use of the state, define, apply and conclude method to answer your questions;
• State: You will state what contravention you have identified from the scenario. Do not simply
copy and paste (because often the scenario only includes a ‘trigger’ and not the full
contravention). Make sure you explain why it is a contravention in terms of the Act. There will be
1 mark available for state.
• Define: Here you will use the content from the Act to state how things are supposed to be done
in terms of the contravention you identified in step 1. This comes from the Act. This is the theory
that you have to study and know. This step contributes the majority of the marks.
• Apply: Here you need to apply the scenario to the information stated in the Act. This is
ultimately where you show WHY there is a contravention (because step 2 tells you how it should
be done, and step 3 shows by way of application how it was done, and that it was done in
contravention with the act). This step also contributes a lot of marks.
• Conclude: This step is where you state that there was a contravention/not. There will be 1
mark available for conclude.
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 Format for answering questions
Practical example of the format:

Apply:
The CFO was found guilty of tax evasion therefore he will be disqualified from being a
director as he will be prohibited by a public regulation (SARS) (1mark).

Conclude:
The fact that the board decided to keep him as a director on the board of Hippo Pools
is in contravention of the Companies Act (1 mark).
 Companies Act:
• Read your required carefully, to understand what you need to discuss and read your scenario
carefully to ensure that you identify the correct sections that are applicable.
• Please answer what is in the scenario and DO NOT make assumptions. Focus on what is in the
scenario. Only include the theory which is applicable to the scenario.
• Study your theory very well as the majority of the marks for Companies Act is given at “Define”
which is the theory.
• Important Sections:
• S44 Financial assistance to companies; S46 Distributions. Please remember to include the
sections that will be triggered because of these sections for example S4 Solvency & Liquidity Test
and S65 Resolutions.
• All sections dealing with Accounting Records, Financial Statements and AFS (S27 – S31).
• All sections relating to the Company Secretary (S86 – S89).
• All sections relating to directors (S70 – S75)
• All sections relating to Auditors (S90 – S93).
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Companies Act:
• Important Sections:
• S76 Standards of Directors Conduct & S77 Liability of Directors, do not forget about these
sections.
• Read your required very carefully as this will indicate whether you should include discuss S76 &
S77.
• If the required does not say anything about these sections start with them.

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Revision Companies Act: Section 76: Standards of Directors
Conduct
What is this section about?

• This section has 3 steps that you need to refer to in your assessment namely:
• Step 1 – What a director of a company must do;
• Step 2 – How a director of a company should exercise powers and perform
functions; and
• Step 3 – What directors need to do to ensure they meet their obligation in Step
2.
Revision Companies Act: Section 77: Liability of directors
• What is this section about?

• This section has 2 ways in which a director will be held liable if they do not meet
the standards of their conduct:
1. Liable in terms of the Common Law – This will always be triggered if there are
contraventions in terms of the Companies Act; and
2. Liable in terms of the Companies Act – This will only be triggered if certain
sections in the Companies Act have been contravened.
Internal Audit
Internal Audit:
• Theory is very important. If you do not study your theory well you will not be able to
answer the required.
• Read your required very carefully and understand what is being asked of you.
• Only answer what is required.
• With regards to the standards you need to study both the requirements AND the
considerations for implementation. The examples of evidence you can leave out.
• Important elements
• Domain III:
• Meeting between the CAE, board and senior management; and
• Disagreements on essential conditions.
• Principle 6 – 8: know what each principle is addressing.

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Internal Audit:
• Important standards:
• Standards 6.1 – Internal Audit Mandate;
• Standard 6.2 – Internal Audit Charter;
• Standard 7.1 – Organisational Independence;
• Standard 7.2 – CAE Qualifications;
• Standard 8.1 – Board Interaction;
• Standard 8 .2 – Resources;
• Standard 8.3 – Quality; and
• Standard 8.4 – External Quality Assessment.
• For each of these standards you HAVE to study the responsibilities of the CAE and
the essential conditions, thus the responsibilities of the board and senior
management!
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 Domain III: Governing the IA function
Step 1

•Meeting with the Board and Senior Management

• CAE must discuss the following with the board and senior management: Responsibilities of both the
board and senior
• The Purpose of Internal Auditing as articulated in Domain I; management
• The essential conditions outlined under each of the standards in Domain III; and
• The potential impact on the effectiveness of the IAF if the board or senior management does
not provide the support outlined in the essential conditions.
• It is important for the CAE to receive input from both the board and senior management. While the
board may have the ultimate responsibility to approve the internal audit mandate, charter, and
other requirements outlined in this domain, senior management typically has a key role in
providing input to the board and the CAE.

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 Domain III: Governing the IA function
•Disagreements on essential conditions:
• If either the board or senior management disagrees with one or more of these essential

1 conditions, the CAE must:

• emphasise with examples how absence of the condition(s) may affect the IAF ability to fulfill its
purpose or conform with specific standards; and
• also discuss alternatives to the essential conditions that may provide the same results.
• CAE may reach agreement with the board and senior management that one or more of the
2 essential conditions are not necessary, then the CAE must document:
• The reasons for agreeing that a particular condition is unnecessary; and
• Alternative conditions that compensate for the absent conditions, to support the judgments of
the board and senior management.
• If the CAE does not agree with the board’s and/or senior management’s reasons for not
3 performing one or more of the conditions:
• CAE may conclude that the IAF cannot conform with the Standards .
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 Domain III: Governing the IA function
•Disagreements on essential conditions:
• In such cases, the CAE should:
• document the reasons why the board and/or senior management will not perform the essential
3 conditions; and
• this documentation should be shared with the board and senior management to ensure clarity
regarding their positions and made available to an external quality assessor.

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CC Act
CC Act:
• Study ALL the sections I highlighted during the lecture!!
• Use the correct format; and
• Read the scenario carefully.
• Important Sections:
• All sections dealing with accounting record, financial year end and financial statements
(S56 – S58).
• All sections dealing with accounting officer (S59 – S62).

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Questions?

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