Exam (elaborations)
AUE2602 Assignment 4 Semester 1 2023
- Institution
- University Of South Africa
AUE2602 Assignment 4 Semester 1 2023 AUE2602 Assignment 4 Semester 1 2023 AUE2602 Assignment 4 Semester 1 2023
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AUE2602 Assignment4 Semester 1 2023
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QUESTION 1
1.1. List the requirements in terms of the Auditing Profession Act of 2005 that the registered auditors of
Nkwana Auditors Inc would have had to comply with to be registered with the IRBA.
The only firms that may be registered are
1) Partnerships of which all the partners are individuals who are themselves registered auditors.
2) Sole proprietors where the proprietor is a registered auditor.
3) Companies which comply with the following:
i. The company must be incorporated and registered in terms of the Companies Act
with a share capital and
its Memorandum of Incorporation must provide that its directors and past
directors shall be jointly and severally liable with the company for its debts and
liabilities contracted during their periods of office.
ii. Only individuals who are registered auditors may be shareholders. (If the company is to
be a private company, its membership is not limited to 50).
iii. Every shareholder must be a director and every director must be a shareholder.
iv. The Memorandum of Incorporation of the company provides that the company may,
without the confirmation of the Court, purchase any shares held in it and allot those
shares in accordance with the company’s Memorandum of Incorporation.
v. Only a shareholder may act as proxy for another shareholder, i.e. no outsiders may
attend, speak or vote at, any meeting of the company. This must be stipulated in the
MOI.
1.2. List the elements to be included in the calculation of Fantasy World’s public interest score.
An entity’s public interest takes into account
average number of employees during the financial year
turnover
3rd party liability at year end
individual who directly or indirectly has a beneficial interest in any of the company’s
shares/members’ interests.
An entity’s public interest score will be the sum of
a number of points equal to the average number of employees during the financial
year
one point for every R1 million (or portion thereof) of turnover
one point for every R1 million (or portion thereof) of 3rd party liability at year end
one point for every individual who directly or indirectly has a beneficial interest in any
of the company’s shares/members’ interests.
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