2. Expense relating to BBBEE status

CDE is also a level 1 BBBEE contributor. They make payments for the skills development of staff and enterprise and supplier development. During the audit of expenses, you noticed an account called BEE expenses. You selected this account for substantive testing and noticed 5 payments adding up to R2 800 000 under suppliers development.

You noticed it was all paid to the same company called Thandi Ventures. You did a Google search on the company and noticed that the Chief Financial Officer (CFO) of CDE, Mr Ceasar is also a Director of Thandi Ventures. On further investigation, you noticed that Thandi Ventures are not one of CDEs suppliers. The person responsible for these payments is the Financial Manager.

requre

3.3 Refer to the information under the heading Expense relating to BEE status and discuss, with reason, the effect the above transaction will have on the audit report for the financial year ended 28 February 2023. Also, discuss the auditors responsibility.