QUESTION FIVE $[20]$

You are a registered accountant and auditor engaged in public practice. A prospective client recently contacted you and told you that he was contemplating converting his sole proprietorship into a private company. His business$$s taxable income for the financial year ended $28$ February $2021$ was R$210000.$ He is$,$ however, not certain as to the effect that such a change would have on his income tax liability, nor is he certain of the levels of assurance that you would be able to provide in any report that you would issue based on the different possibilities as to engagement circumstances.

Required:

$5\mathrm{.}1.$ Explain to the client the effect of the proposed change on his income tax liability. $(5)$

$5\mathrm{.}2.$ Explain the possibilities as to the levels of assurance that you would be able to

provide in terms of the proposed changed business. $(7)$

$5\mathrm{.}3.$ Differentiate between each of the following and provide examples for each:

$5\mathrm{.}3\mathrm{.}1.$ Assurance and Non assurance engagements. $(4)$

$5\mathrm{.}3\mathrm{.}2.$ Statutory and non$-$statutory audits. $(4)$