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REQUIRED - QUESTION 1 MARKS SUB- MARKS TOTAL A Using the information contained only in Part 1 - Background 9 10 information, discuss the factors that Numbers Inc should have considered before accepting the appointment of Innovative Transport (Pty) Ltd. Communication: Structure and clarity of expressionQuestion 1 45 MARKS 1. Background Innovative Transport (Pty) Lid ("IT') is a company that is involved in the development of new ideas relating to changing the conventional way of transport. The company's current year-end is 30 September 2020. The core idea that IT has been busy with for the past few years is the development of an atmospheric railway system. This railway system uses air pressure which allows the train to move on a specialised track. As the train uses air pressure, this is viewed as an environmentally friendly source of transport owing to its lack of emission of pollutants. IT was started by Charles King 10 years ago, who is also the majority shareholder and Chief Executive Officer ('CEO") of IT. The minority shareholding is held by Charles' friends who have invested in IT. Charles is responsible for all decisions in the company and usually discusses the decisions he has taken with the other shareholders when they meet at cricket practice. Charles believes that by him taking the decisions, it removes the red tape and everything gets done faster. In order to create structure within IT, Charles officially appointed his daughter, Ivy King, as the Chief Financial Officer ('CFO") in January 2020 after she completed her BCom (Acc) degree in 2019. This was done in order to obtain funding from external parties for the company's expansionary projects which includes IT's intention on making proposals to the government for the use of the railway system. Prior to this the finance function of the company was completed by the junior accountant, Andrew Smith, whose work would be reviewed by Ivy when she had time during her studies. Up to 2019, IT was audited by James Pedro, who is a sole practitioner. James and Charles have been friends from high-school however James relocated, and IT required new auditors. James has indicated that he will be willing to share his working papers with the new appointed auditors. You are an Assistant Manager (having just completed your articles) at Numbers Inc. The clients that you have dealt with relate to insurance and investment clients. During October 2020 you were planned to attend training relating to the more intricate details of financial instruments such as accounting and tax consequences. However, to your surprise you received an email indicating that your training has been cancelled and you will have to attend an alternate session. When you contacted the resource planner she responded as follows: What can you do? You know its revenue and deadlines before training. This is the instruction from Ajay Singh who is the partner for our new client Innovative Transport. Ajay has brought such change to Numbers since he joined 2 years ago. He secured this deal when attending cricket practice with the CEO, Charles. Sorry about the training cancellation, the senior manager who was assigned to IT was put on leave by the doctor, apparently for fatigue. Well what can we say, Numbers Inc is not for the weak. We are currently short-staffed and everyone else is assigned to multiple audits and juggling deadlines apart from you. Ajay has said you can attend an alternate session'. You attempted to call Ajay after the above phone call, however you were unable to get off the audit of IT. You were added to the audit file and have access to information that has been uploaded
