3.1 AUDIT REPORTS Choose an audit opinion from COLUMN B that best describes the audit report in COLUMN A - NSC Accounting - Question 3 - 2017 - Paper 1

This report is classified as an A (Qualified audit report). It notes that insufficient evidence was available to provide a definitive audit opinion.

The disclaimer report is classified as an A (Qualified audit report), meaning the audit opinion cannot be expressed due to lack of evidence.

The Retained Income note calculates as follows:

• Balance on 1 March 2016: R57,480
• Funds used to repurchase shares: - R50,000
• Net profit after income tax: R681,720
• Ordinary shares dividends: - R389,000
• Interim dividend: - R179,200
• Final dividend: - R210,000

Balance on 28 February 2017: R300,000

The completed Balance Sheet is as follows:

ASSETS

• Non-current assets: R4,310,545
• Current assets (including cash and cash equivalents): R889,455 + R650,000 (fixed deposit) = R1,539,455

TOTAL ASSETS: R5,200,000

EQUITY AND LIABILITIES

• Shareholders' equity includes:
  • Ordinary share capital: R740,850
  • Retained income: R300,000

TOTAL EQUITY AND LIABILITIES: R5,200,000

To calculate the number of shares Bakkies must buy:

• Bakkies owns 42% of shares initially, which equals 252,000 shares out of 600,000.
• To gain control, he needs 51%: $51\% \times 600,000 = 306,000 \text{ shares}$
• Therefore, he must buy: $306,000 - 252,000 = 54,000 \text{ shares}$

1. It is illegal and unethical to act against the law as prescribed by the Companies Act, which governs share transactions.
2. The lack of advertising limits transparency in the market, disadvantaging the existing shareholders who may wish to sell their shares at a better price.

This expense will be disclosed as a commitment to employee development in the notes section of the annual report, reflecting the company's investment in its personnel and future productivity.