You are a senior trainee accountant in your audit firms technical department. Your responsibility is to advise fellow staff members, conducting an audit, on statutory and corporate governance matters.

One of the firms clients is the Tesla Group. All companies in the group manufacture retail or wholesale electronic vehicles and related accessories. T Tesla, Inc. is an American multinational automotive and clean energy company headquartered in Austin, Texas, which designs, manufactures and sells electric vehicles, stationary battery energy storage devices from home to gridscale, solar panels and solar shingles, and related products and services.

The group is structured as follows: Tesla Ltd holds of Volkswagen, of FordPty Ltd and of Nissan. FordPty Ltd holds of the shares in Porche Ltd

Your firm Thanos Ltd holds the appointment, as auditors of all companies in the group and the various audit teams are currently engaged in the August year end audit.

You have received the following details about your trainees:

Scenario

Tony Stark on the audit of Nissan found that an amount of R million in trade creditors owed to Bruce WaynePty Ltd This represents the purchase during August of a machine that manufactures electronic vehicle, specifically, SUVs that can travel km on a single charge. Bruce WaynePty Ltd is fully owned by Jordan Peterson and two of the four directors of Nissan who have no shareholding at Nissan.

Tony also found out the CFO at Nissan is Jordan Petersons wife Sandra. She had negotiated the loan on behalf of Nissan. Moreover, she had assisted her son Derek to buy shares at Nissan at a lower price. After all she assisted in solving Nissans liquidity issues.

Tony was offered R as a gift at the beginning of the audit engagement. Tony used half of the money to support a nearby orphanage and donated the rest for war victims in

Palestine. Tony found that all the source documents including purchase documentation, for example, a purchase order, delivery note, invoice and entries in the records, were correct. However, the Sandras benefits were not disclosed in the notes to financial statements.

Scenario

Hunter Biden, was selected to lead the audit of Ford Pty Ltd He found out the carbon emission in Ford was above what they disclosed. The CEO stated that this minor deviance was because of measurement errors. He also mentioned that he was close friends with government officials. He casually mentioned the disappearance of an auditor who did not know how to do business Furthermore, the company has made a number

of loans during the past year. Several bank transfers were made

One was a R expenditure to the Bahamas which was documented as directors travelling allowance. This was spent by Paul, the managing director of Porche Ltd who also serves on the board of FordPty Ltd

REQUIRED

a Elaborate on the corporate governance issues mentioned in each of the scenarios

b Synthesis all the information learnt from the professional codes of conduct, ethics,

South African legislation and King codes to give recommendations and guidance to the above scenarios

c How would you advise each of the trainees under your supervision?

d Share your audit engagement strategy justifying each phase