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Asap please ill upvote for the correct answer QUESTION TWO [50] You are the audit senior of Freedom (Pty) Ltd, a platinum mining company operating
Asap please ill upvote for the correct answer
QUESTION TWO [50] You are the audit senior of Freedom (Pty) Ltd, a platinum mining company operating in the Marikana community. The company has mostly employed from the Marikana community. The company has employed about 670 employees of which it is anticipated that about 15 people would have left due to resignations and retirements by the end of the year. The company has been in business for almost 30 years and in the current year it has made a profit of R22.5 million which is 30% of the turnover. The employees working for the mine are currently on strike and they are demanding a minimum wage of R18 500 per month from a previous salary of R7 700 per month. Employees are not prepared to settle for anything less than what they are demanding. In a recent management meeting, the following was discussed and approved: 1) That all employees must return to work and accept an increase of R1500 per month or face losing their jobs. Management confirmed that they are not going to take the matter to court. 2) That an issue of 10 000 shares be made and a loan of R3 million be taken from Thabo Dennis Bank (TDB). This will assist in covering the costs relating to salary increases. This issue will be offered to its existing 17 shareholders and the loan taken will result in a loan balance of R17 million. 3) That the chief financial officer will have to depreciate assets that are held for sales. Although auditors have disagreed with this treatment, the company wants to maintain its ratios and reduce its tax liability. As a result of this, there is an audit difference of R1,9 million as a result of the incorrect treatment against IFRS 5.4) That the chief operations officer (COO) will be solely responsible for the information technology (IT) of the company and the COO will report directly to the board. You are concerned about the resolution taken and the impact it might have to the company. The audit file reveals that the final materiality is R1,1 million. You have asked your audit manager to help you understand the impact of the resolution on the audit of Freedom (Pty) Ltd for the year ended 31 December 2021. You are required to: a) Critically discuss how the company should try to resolve the wage dispute in terms of King III. Your discussion must include a justification of your choice. (9) b) Calculate the public interest score for Freedom (Pty) Ltd and comment on whether an audit or review is required (you may research and read up public interest score online). (7) c) Briefly discuss the materiality of the unresolved audit difference of R1,9 million with regards to factors that need to be considered when evaluating unresolved audit differences. (11 ) d) Draft an audit report for Freedom (Pty) Ltd assuming that it was audited and the audit differences remain unresolved. You are only require to write the opinion paragraph and the basis for the opinion paragraph. (10) e) Briefly discuss sustainability issues relating to people and communities you would expect Freedom (Pty) Ltd to report on in its integrated report in terms of King III. (8) f) Evaluate management's decision about IT in terms of KingStep by Step Solution
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