Recent Developments

In the past year, CapeTown Essentials $($Pty$)$ Ltd$.$ engaged the services of Mr$.$ Siyabonga Khumalo, a Chartered

Accountant, to oversee their financial operations and ensure compliance with accounting standards. However, several

concerns have arisen:

Undisclosed Financial Interests: An internal audit revealed that Mr$.$ Khumalo has a significant undisclosed financial

interest in one of CapeTown Essentials' major suppliers. Despite this conflict of interest, he has been directly involved in

awarding contracts to this supplier, often sidelining other suppliers who offered better quality products at more

competitive prices.

Financial Statement Manipulation: A junior accountant in the team raised concerns about certain adjustments Mr$.$

Khumalo made to the financial statements. These adjustments seemed to present a more favorable financial position,

ostensibly to attract potential investors for the company's expansion plans.

Confidentiality Breaches: Confidential financial data, which was under Mr$.$ Khumalo's purview, was leaked to a

competitor. While the source of the leak is still under investigation, the fact that such sensitive information was not

securely managed has raised eyebrows.

Misleading Representations: Mr$.$ Khumalo, in his capacity as the company's CA$,$ made presentations to stakeholders

where he exaggerated the company's projected growth based on the manipulated financial statements, potentially

misleading them about the company's future prospects.QUESTION $1(10$ Marks$)$

Given the recent developments concerning Mr$.$ Siyabonga Khumalo, a Chartered Accountant overseeing the

financial operations at CapeTown Essentials $($Pty$)$ Ltd$.$:

a$)$ Identify which of the fundamental principles belonging to the SAICA Code of Professional Conduct Mr$.$

Khumalo may not have complied with.

$(5$ Marks$)$

b$)$ For each identified principle, provide a brief justification based on the provided scenario. $(5$ Marks$)$