You are the financial accountant of Rabbit (Pty) Ltd and are preparing the financial statements for the year ended 30 June 2003. The AGM is scheduled to be held on 12 August 2003, on which date the financial statements are to be approved by the directors. The following matters come to your attention:

i. On 1 August the Accountant uncovered a serious fraud, amounting to R500 000. The trade payables clerk had created a fictitious supplier account, issuing false invoices to the company, and was then single-handedly diverting funds into a dummy bank account. The clerk has subsequently been fired and the matter was reported to police.

ii. The company paid a dividend on 13 June 2003, to all shareholders on the share register as at 3 June 2003. However, during July 2003, the company has sustained cash shortages ( owing to large trade payables made in early July). As a result, the company has requested a return of a portion of the dividend payment from its shareholders. Required: Assuming todays date is 5 August 2003, discuss whether the matters noted above require amendment in the financial statements for the year ended 30 June 2003.

 

Answer rating: 100% (QA)

Answer The fraud uncovered by the accountant on 1 August does not require any amendment to the finan... View the full answer