$2\mathrm{.}1$

$(37$ marks $44$ minutes$)$

YOU ARE REQUIRED TO:

State whether each of the following is true or false. Justify your answers.

King IV recommends that the audit committee should oversee the integrity of the annual financial statements and other external reports.

$1\mathrm{.}1$ The audit committee should be responsible for monitoring the integrity and completeness of the company's financial reporting.

$1\mathrm{.}2$ The audit committee should encourage 'opinion shopping' $($for example approaching other auditors for a different opinion on the company's AFS$),$ but only if the board unanimously supports this action.

$1\mathrm{.}3$ The chairman of the audit committee should recuse himself from the AGM when the financial results are discussed with the shareholders so as not to undermine the position of the financial director.

$1\mathrm{.}4$ The audit committee should review management's assessment of the going concern ability of the company at the financial year$-$end.

$1\mathrm{.}5$ If the board deems it appropriate, the audit committee may be given the responsibility of reviewing the integrated report.

As part of combined assurance, the external auditor should oversee that internal audit follows a risk$-$based internal audit plan.

Chapter $2$: Corporate governance, internal auditing and audit committees

$21$

$3.$ The 'six$-$capitals' that a company has available to it are applicable to all companies and, as such, the integrated report should be structured in terms of all six capitals.

$4.$ Reporting in the triple context requires that companies report on historical profits, future profits and dividend distributions.

$5.$ The external auditor should appoint the chief audit executive. $($No need to justify answer.$)$

$6.$ The internal auditors and the external auditors should co$-$operate where possible. $($No need to justify answer.$)$

$7.$ The Companies Act $2008$ requires that all companies appoint an audit committee.

$8.$ Internal audit's primary function is to detect fraud and corruption.

$9.$ In terms of King IV$,$ the board should ensure that a quality review of the internal audit function is carried out by the external auditors at least once every five years.

$10.$ Compliance with King IV requires that the chief executive officer should be the chair of the remuneration and nomination committee.

$11.$ The senior partner of the company's firm of legal advisers should not be the chairperson of the company.

$12.$ All directors, both executive and non$-$executive, must be financially literate.

$13.$ The nominations committee should comprise a balance of executive and nonexecutive directors.

$14.$ The company secretary$\text{'}$s duties include reporting to the board on failure on the part of the company or a director to comply with the Companies Act $2008.$

$15.$ The chief audit executive $($CAE$)$ should be a member of executive management.