Question 16

Question text

Protea Limited (Protea) is the largest distributor of consumer goods, general merchandise, home improvement equipment and is a wholesaler of basic foods in South Africa. Proteas governance structure consists of the board of directors, assisted by four committees, namely the audit, remuneration, risk governance and nominations committees and an internal audit section. The chairperson of the board (CEO) is Mr S Bokkie. Mr Bokkie owns 15% of the equity interest in Protea. He has also served as the Chairperson of the Audit Committee of Protea for a number of years.

Who should, in terms of the King IV report, be responsible for the assessment of the effectiveness of risk management in Protea?

Select one:

a.

Mr Bokkie, the CEO

b.

Internal audit section

c.

The governing body

Question 17

Starlight Wholesalers Ltd is a manufacturer of branded sneakers for retail stores. The cost accountant is unsure which of the costs incurred should be included for the manufacturing cost of a special order.

The warehouse foreman provides you with the following details relating to the special order. The order was a once-off order from Live Sneakers for a special style of sneakers. This order had to be completed in five weeks and required warehouse personnel to work a week of overtime in that period to complete other orders. Due to the design of the sneakers, a bale of fabric was wasted. The order was stored in the storage facility for two days before it was shipped to Live Sneakers.

Which one of the following statements is correct about the calculation of the cost of manufacture for the special order?

Select one:

a.

The cost of manufacture should exclude the wasted bale of fabric; labour costs are for the five weeks based on normal hours; and storage costs for the two days should be excluded.

b.

The cost of manufacture should exclude the wasted bale of fabric; labour costs are for the five weeks based on normal hours as well as the overtime hours for one week, storage costs for the two days should be excluded.

c.

The cost of manufacture should include the wasted bale of fabric; labour costs are for the five weeks based on normal hours as well as overtime hours for one week; and storage costs for the two days should be excluded.

d.

The cost of manufacture should include the wasted bale of fabric; labour costs are for the five weeks based on normal hours; and storage costs for the two days should be included.

Question 18

Starlight Wholesalers Ltd employs more than 70 employees at its factory in Wynberg. The following is a risk in the payroll and personnel cycle.

There could be misappropriation of unclaimed wages.

Which one of the following alternatives describes the best internal control activity that can be implemented to address the above-mentioned risk in the payroll and personnel cycle?

Select one:

a.

Employees should be given a maximum of five working days to claim their wages.

b.

The unclaimed wages should be retained by the warehouse controller who should lock them away.

c.

The warehouse controller and human resource personnel paying out the wages must agree all unclaimed wages to the payroll for employees who have not signed.

d.

When employees collect their unclaimed wages, they need to go to the warehouse controller who has their wage packets.