Trevor Msinga is a newly appointed CFO of Amazing Ltd. Amazing Ltd has not been doing...
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Trevor Msinga is a newly appointed CFO of Amazing Ltd. Amazing Ltd has not been doing well in the past few months. Trevor had pressure from the company's stakeholders to turn things around. He entered into and approved the supplier agreement, where goods are to be sourced from Ndlovu Trading Inc. in the next 3 years. Ndlovu Trading Inc. is a company that owns a manufacturing plant in the Limpopo surrounds. The company started trading last year and is owned and managed by Themba Mnisi, Trevor's brother-in-law. As a result of the agreement, Amazing was able to source the inventory at a very low price, the inventory does not go through a quality standard test before being sold to customers. This resulted in the company making a higher Gross Profit on sale of goods to customer due to lower costs (cost of sale). The GP margin increased by 75% from its historical GP margin of 25%. Required 2.1. Discuss fully whether the above situation constitutes a reportable irregularity in terms of section 45 of (10 marks) the APA, 2005 2.2. Explain what actions you would take, if any, regarding the above matter. (10 marks) Trevor Msinga is a newly appointed CFO of Amazing Ltd. Amazing Ltd has not been doing well in the past few months. Trevor had pressure from the company's stakeholders to turn things around. He entered into and approved the supplier agreement, where goods are to be sourced from Ndlovu Trading Inc. in the next 3 years. Ndlovu Trading Inc. is a company that owns a manufacturing plant in the Limpopo surrounds. The company started trading last year and is owned and managed by Themba Mnisi, Trevor's brother-in-law. As a result of the agreement, Amazing was able to source the inventory at a very low price, the inventory does not go through a quality standard test before being sold to customers. This resulted in the company making a higher Gross Profit on sale of goods to customer due to lower costs (cost of sale). The GP margin increased by 75% from its historical GP margin of 25%. Required 2.1. Discuss fully whether the above situation constitutes a reportable irregularity in terms of section 45 of (10 marks) the APA, 2005 2.2. Explain what actions you would take, if any, regarding the above matter. (10 marks)
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21 Discussion on Reportable Irregularity The situation described could potentially constitute a reportable irregularity under section 45 of the APA 20... View the full answer
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