PART 4

The shareholders of Decorative (Pty) Ltd, a company which sells a large range of home dcor products, have recently included a clause in its MOI which requires that the company has its annual financial statements externally audited. Based on its public interest score, the company is required to have its financial statements reviewed but as none of the shareholders are active in the business, they have decided to include the audit requirement in the MOI. The shareholders are considering appointing Sarvesh Govinder, a newly qualified chartered accountant registered with the IRBA, as the company's auditor. Sarvesh had previously worked briefly in Decorative (Pty) Ltd's accounting department during his university breaks before commencing his training contract, and one of the shareholders of Decorative (Pty) Ltd is Sarvesh's father.

YOU ARE REQUIRED TO:

(a) Describe the steps the shareholders would have to take to add the audit requirement to the companys MOI. (2)

(b) Discuss whether Sarvesh Govinder would be eligible to take up the appointment of auditor of Decorative (Pty) Ltd.