TakeItAll Ltd $($TakeItAll$)$ was incorporated in June $2016$ by Moya Sabela and soon

thereafter acquired the shares of an existing e$-$commerce business called Thenga

Konke Ngemali $($Pty$)$ Ltd$.$ TakeItAll is listed on the Johannesburg Stock Exchange,

and it has disclosed to its shareholders that it complies with all the recommended

practices of King IV$.$ With a financial year ending on $31$ December $2023,$ TakeItAll has

consistently delivered strong financial results, thanks to its dedication to excellence and

innovation.

Moya stepped down as the Chief Executive Officer $($CEO$)$ of TakeItAll on $31$

December $2016,$ upon which the Board of Directors appointed his son, Saziwayo

Sabela, as the new CEO.

TakeItAll is South Africa$$s largest, most innovative e$-$commerce retailer. The

company$$s head office is in Johannesburg. TakeItAll regards its customers as its

main asset, which is reflected in its passion for providing an exceptional customer

experience from the moment customers access its website until the product they

ordered is delivered. TakeItAll is also committed to positively impacting its

shareholders, society, and the environment in which it operates. The financial year

end of TakeItAll is $31$ December. TakeItAll employes a team of delivery drivers

responsible for transporting its products to retail partners across the country. These

retail partners then sell TakeItAll$$s products directly to consumers. The delivery

drivers operate flexible schedules, with the expectation of completing their deliveries

during their retail partners' business hours. Once their deliveries are completed for

the day, the drivers are free to conclude their workday and return home. However,

the pressure to complete deliveries efficiently sometimes leads drivers to disregard

road regulations, prioritising speed over safety.In October $2023,$ the previous auditors of TakeItAll resigned for the following

reasons:

$$ Their fees for the prior$-$year audit, being the $2022$ financial year $($FY$2022)$

audit, had not been paid, because Saziwayo felt the four months that the audit

took to complete was excessive. They completed the audit at the end of April

$2023$; and

$$ Saziwayo refused to grant them access to certain financial data which they

required to perform their audit duties for FY$2023.$ To ensure a quicker completion of the FY$2023$ audit, the previous auditors commenced auditing

certain transactions as they occurred from July $2023.$

You are a first$-$year trainee accountant at the audit firm Dlangezwa and Partners Inc.

$($Dlangezwa and Partners$).$ Gqatsiwe Dlangezwa, one of the partners at your audit

firm, and Saziwayo have been good friends since their childhood. For this reason,

and since TakeItAll does not have an audit committee, Saziwayo unilaterally

appointed Dlangezwa and Partners as the external auditor for TakeItAll for FY$2023,$

with Gqatsiwe as the audit engagement partner. In addition, TakeItAll paid a $15\%$

deposit for the services to be rendered to ensure that Gqatsiwe would sign the

engagement letter. A condition set by Saziwayo was that Gqatsiwe should not

contact the previous auditors and she agreed to that.

Dlangezwa and Partners are satisfied that Gqatsiwe has the necessary knowledge,

skills, and experience to complete the audit, for the following reasons:

$$ In addition to being a Registered Auditor and CA$($SA$),$ she has a master$$s

degree in ecommerce; and

$$ She is the audit engagement partner of Fantastic$-$online$-$Shopping $($Pty$)$ Ltd

$($Fantastic$),$ a company that the directors of TakeItAll are planning to take

over in $2025$ as part of their $$long$-$term strategic market share growth

programme$.$ Saziwayo advised that there $$may be something in it$$ for

Gqatsiwe if she is able to assist in making the deal happen and can ensure

that the profits of Fantastic are not as high as one would expect.

You attended the audit $$kick$-$off$$ meeting on $18$ January $2024$ with Gqatsiwe and the

rest of the audit team. This was after you and the other audit team members were

reassigned from other audit clients to focus on the audit of TakeItAll. You were all,

however, informed that you would have to find the time to perform this audit while still

completing outstanding work on other clients and despite many of you already

working overtime. You were therefore not surprised to learn of recent instances

where audit team members were under such extreme work pressure that when

tasked to audit a sample of items, they completed the workpaper as having audited

these items without having done any work. Gqatsiwe is of the opinion that it is

sometimes necessary to find shortcuts to ensure all audit work is completed on time.During the kick$-$off meeting Gqatsiwe made it clear that TakeItAll is an especially

important client of the firm as the audit fee would boost the turnover of Dlangezwa

and Partners significantly and there is also the possibility of additional services being

provided to TakeItAll. She stated that in her opinion this could result in further

significant increases in turnover, such that TakeItAll would be one of the top five

clients of Dlangezwa and Partners.

She also noted the following:

$$ The accounting staff of TakeItAll are all competent and experienced CAs $($SA$).$

Therefore, the audit team should not spend more hours than those budgeted.

Each audit team member who did not work longer than the budgeted hours

would be guaranteed a satisfactory performance rating and consequently a

good annual performance bonus. She stated that she believed that the

accounting staff of TakeItAll were the best she had come across and could be

trusted, which meant that the audit team did not need to ask too many

questions.

$$ Her husband, Mbuso Dlangezwa $,$ is the financial controller of TakeItAll and he

would ensure that the audit team obtained the necessary supporting audit

documentation to enable them to finalise and sign off on the audit as quickly

as possible. This is important as potential investors in TakeItAll required the

audited financial statements of TakeItAll for FY$2023$ before $31$ March $2024.$

$$ She had agreed on the terms of the audit engagement with Saziwayo over

dinner a few nights before and stated that she would document their

agreement and place it on file at a later stage. She would get Saziwayo to

sign the engagement letter when he returned from his vacation on $28$ March

$2024.$ She had reassured Saziwayo that the audit team would commence with

the audit in the meantime.

$$ She is under a great deal of work pressure and would have limited time to

review all the audit workpapers herself and monitor the audit team closely.

However, she expressed confidence in the capabilities of her staff.

$$ The audit team includes team members who have some knowledge, skill, and

experience of the e$-$commerce retail industry. She mentioned to the team that

if they have any questions, they were welcome to contact a friend of hers who

works at Takealot.com and can share details of the transactions they areauditing to gain a better understanding of the appropriate accounting

treatment.

$$ The management of TakeItAll has indicated that they would like to invite the

audit team to the final national rugby league match, since TakeItAll has a

corporate hospitality area in the stadium. This is an elite event and TakeItAll

will ensure that all costs are covered, which includes food, drinks and branded

supporter shirts.

$$ The team has also been requested to be available on $4$ April $2024,$ as

TakeItAll and Naura & Partners have arranged to co$-$host an exhibition stand

at the annual African E$-$Commerce Expo.

$$ Gqatsiwe also announced a new remuneration policy for Naura & Partners, in

terms of which audit team members would receive a bonus if they identified

viable additional services that the firm could render to audit clients.Shortly after the kick$-$off meeting, the audit senior provided you with the following

workpapers:Gqatsiwe Dlangezwa, a dedicated partner at Dlangezwa and Partners

audit firm, finds himself crisscrossing South Africa, tasked with

auditing the firm's clients. It is a demanding task, one that requires

him to be on the move constantly, scrutinizing financial records and

ensuring compliance with regulatory standards. In consideration of his

pivotal role, Gqatsiwe's contract with Dlangezwa and Partners

includes provisions for his extensive travel, offering him a monthly

travel allowance of R$9,700,$ aimed at alleviating the financial strain

incurred from using his personal vehicle for business$-$related

purposes. Speaking of his car, Gqatsiwe himself made a significant

investment at the start of the assessment year, purchasing a sleek

BMW for R$700,000.$ This vehicle serves him well, serving both his

business needs and personal preferences. Yet, with great ownership

comes great responsibility, and Gqatsiwe diligently records all

associated costs, including maintenance expenses totaling R$16,000$

and the fuel costs of R$14,400.$Considering his other income sources, Gqatsiwe receives a monthly salary of R$47$

$500$ from Dlangezwa and Partners, alongside interest earnings of R$35600$ from the

local bank and local dividends of R$30000,$ all of which are reflected on his bank

statement.

Through it all, Gqatsiwe exemplifies professionalism and dedication,

navigating the highways and byways of South Africa with precision

and purpose. As an integral part of Dlangezwa and Partners, his

efforts ensure that the firm's clients receive the thorough,

conscientious auditing they deserve, cementing their trust and

confidence in the services provided.Question $1$ : identify and discussing the threats to

the independence of Gqatsiwe or

Dlangezwa and Partners with regards to the

audit of TakeItAll Ltd with reference to the

information in the scenario.

Question $2$: discuss the concerns you might have

regarding the quality of the audit of TakeItAll

arising from the discussions at the audit kick$-$off meeting on $18$ January $2024.$