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the provision can be made. (14) 13.15 (16 marks 22 minutes] You are the auditor on the audit of CandyCanes (Pty) Ltd, a company that
the provision can be made. (14) 13.15 (16 marks 22 minutes] You are the auditor on the audit of CandyCanes (Pty) Ltd, a company that manu- factores and sells sweets to supermarkets all over South Africa. The company has had a difficult financial year and it saw a steep decline in the demand for its products. Below is an extract of matters that were discussed at Candy Canes (Pty) Lid's latest board meeting: Matter 1 The company's financial director, Michael Money, shared with the board that CandyCanes (Pty) Ltd is in a position of factual insolvency. He further explained that the future of CandyCanes (Pty) Led depends on the success of the agreement recently entered into with Hyper-Cash-and-Carry. (CandyCanes (Pty) Lid decided at the previous board meeting that sweets would be sold to Hyper-Cash-and-Carry at special wholesale prices, provided that Candy Canes (Pty) Ltd would be Hyper-Cash- and-Carry's sole supplier of sweets - all of the directors of the company voted in favour.) However, one of the directors, Steven Short, assured the board that, as his brother, Sam Short, is the managing director of the Hyper-Cash-and-Carry group, he would put in a good word with him. The board was pleasantly surprised to learn about this relationship
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