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The final materiality figure for the 2021 audit of the Department of Corrections was set at R150 million.
During the audit of Capital Assets, the auditors identified misstatements in the valuation of major moveable tangible
assets. The financial reporting framework for Departments requires a department to record assets on receipt of the item
at cost of acquisition. Where the cost cannot be determined accurately, the asset should be stated at fair value. Where
fair value cannot be determined, the asset should be included in the asset register at R1. The Department of Correction’s
major movable tangible assets as disclosed in disclosure note 35.1 to the financial statements did not in all instances
reflect the cost or fair value of the assets and consequently assets were overvalued by R193 million.
Discuss the effect of the misstatement identified on the audit opinion.
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