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The following audit report was drafted by a trainee on the audit of Khomas Power (Pty) Ltd, a company which manufactures lighting systems. The trainee

The following audit report was drafted by a trainee on the audit of Khomas Power (Pty) Ltd, a company which manufactures lighting systems. The trainee was asked to draft the report at the conclusion of the audit for the financial year end 30 June 2020 as part of on-the-job training and as part of your training, you have been asked to evaluate his report. The shareholders of Khomas Power (Pty) Ltd included a clause in the companys Memorandum of Incorporation which requires that the companys annual financial statements are externally audited.

Independent Report

To the board of directors.

We have evaluated the accompanying financial statements of Khomas Power (Pty) Ltd for fairness based on our annual audit carried out in terms of the Memorandum of Incorporation of the company.

Management is responsible for the preparation of the financial statements and for the prevention of fraud.

The auditors responsibility is to perform the audit and in doing so, to detect any fraud which may have a material effect on the financial statements not having been prevented by the directors.

We report on the following aspects of the audit:

1. An expert was engaged by our firm to assist in the valuation of work-in-progress. Due to the complexity of some of the companys lighting systems, the risk of misstatement in work-in-progress warranted this.

2. The company is currently being sued by a former employee who suffered personal injury at work whilst testing electric current flow during quality control procedures.

3. With regard to the detection of fraud, we detected a small wage fraud relating to unauthorized overtime. We reported this to management who subsequently dismissed the perpetrators.

In our opinion, except for the matters raised in 1 to 3 above, there are no outstanding issues arising from the audit which was conducted in terms of the International Standards on Auditing and the International Financial Reporting Standards.

Emphasis of matter

There are no matters which require emphasis.

Hawala and Shikongo

30 June 2020

45 Independence Avenue

Windhoek Central

You are required to detail the errors/deficiencies in the audit report presented to you for evaluation (give explanations where necessary). You are not required to redraft the report.

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