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Introduction to the audit of Sipla:

You are an audit partner at Pro$-$Audit Auditors Incorporated $($hereafter Pro$-$Audit$),$ one of the world's major accounting and consulting networks, with $200$ member firms and $500$ offices in $80$ countries. Pro$-$Audit has a national presence with firms in Cape Town, Durban, Johannesburg and and food industries. Pro$-$Audit has been mostly businesses in the retail, hearter $($hereafter Sipla$)$ during the current year, appointed as the auditors of Sipla $($CFO$)$ of Sipla $($Xolisa Mtopi$)$ informed the previafter the Chief Financial O ous auditors of her intention their touch.$\text{'}$

previous auditors wer $\text{'}$

You are very good recent visit, you discussed how well the company is currently permits. During a soures in Sipla.

doing, and focumented by the audit team during an initial The following

Sipla is the largest pharmaceutical company in Africa and has a proud heritage dating back more than $160$ years. Sipla's year end is $28$ February $2023.$ Sipla is committed to sustaining life and promoting healthcare through increasing access to its high quality, effective, affordable medicines and products. Sipla is listed on the Johannesburg Security Exchange $($JSE$)$ and, therefore should comply with the JSE$-$listing requirement, stating that audited financial statements should be submitted within six weeks after year end. The founder and current CEO, Mr Thomas, is still the major shareholder in the company.

Sipla provides a diverse basket of branded, generic consumer health and infant nutritional products, which are supplied to pharmacies, retail pharmacy chains, hospitals, dispensing general practitioners, managed healthcare funders and retail stores across the private and public sectors in South Africa.

Sipla's product ranges cover several therapeutic categories. These include anaesthetics, analgesics, antiretroviral, cardiovascular system, infant$-$nutritional products, oncology, oral hygiene and more. Sipla has two pharmaceutical manufacturing sites situated in Johannesburg and Stellenbosch, and five distribution centres in Port Elizabeth, Durban, Cape Town, Pretoria and Bloemfontein.

During the current year, Sipla acquired the majority shareholding in Packsters $($Pty$)$ Ltd $($hereafter Packsters$).$ All the packaging used by Sipla is purchased from Packsters. The acquisition of Packsters has put severe pressure on Sipla's cash resources.

Sipla's manufacturing plant in Port Elizabeth is presently undergoing an upgrade. The capital investment is being incurred to increase production capabilities and to provide on$-$going compliance with Pharmaceutical Inspection Convention Standards. Inspections by the Medical Control Council $($MCC$)$ and other international regulatory authorities including the US FDA, are scheduled to take place within the next year.

Sipla converted their tailor$-$made accounting system to a SAP IT package during October $2022,$ to provide management with more comprehensive information. The new accounting system enables Sipla to implement a new remuneration policy for management that are based on profits of the company

Sipla recently received bad publicity. They are being sued by a woman who claims that, while using Sipla's new Canna$-$pain tablets, her husband became very ill and subsequently died of a stroke. Although there is no clear evidence to support these allegations, the public took to facebook complaining that Sipla is a money$-$oriented company who is not interested in sustainable results. The new product $($Canna$-$pain tablets$)$ is a herbal cannabis oil option for patients who prefer alternative pain medication. Sipla did not send the new herbal medicine for any type of clinical trial. Sipla has issued a statement to the public stating the facts and that they will assist the family with relevant expenses. The company has also discontinued its manufacturing and distribution of the Canna tablets while awaiting the results of a clinical trial.

YOU ARE REQUIRED TO:

With specific reference to the information provided, discuss the matters that ProAudit Auditors Incorporated should have considered when deciding whether or not to accept the audit engagement.

Note: Limit your answer to only the aspects clearly indicated in the information.