Accounting and Public Interest Score Analysis

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Questions and Answers

What is the maximum number of days Liquid Veg (Pty) Ltd has to distribute declared dividends to its shareholders?

21 days

360 days

120 days (correct)

30 days

Which document is mandatory to accompany the notice of the annual general meeting sent by Boabab Ltd to its shareholders?

A copy of the memorandum of incorporation

A copy of the company's latest annual return

A copy of the annual financial statements (correct)

A copy of the following financial year's budget

According to the companies act, what is the minimum number of shareholders required for a meeting of Rock Lee Ltd to commence?

5 Shareholders (correct)

2 Shareholders

10 Shareholders

20 Shareholders

What type of resolution is needed for shareholders to amend the memorandum of incorporation (MOI) of Donald Ltd?

A special resolution Signup and view all the answers

In which situation would an individual be disqualified from serving as a director of a company according to the companies act?

An individual currently in bankruptcy serving as a director Signup and view all the answers

What is the purpose of a special resolution in corporate governance?

To amend fundamental company documents Signup and view all the answers

During what event must Boabab Ltd present its annual financial statements to shareholders?

Annual general meeting Signup and view all the answers

What is the minimum shareholding required for a quorum in the meeting of a company with 20 equal shareholders?

5 shareholders Signup and view all the answers

Under which circumstances can a personal liability company distribute dividends to its shareholders?

Only if it has passed the solvency and liquidity test. Signup and view all the answers

What is the minimum requirement for a company to be classified as a personal liability company?

The company's name must end with (Pty) Ltd or (Proprietary) Limited. Signup and view all the answers

What is required for shareholder voting during an Annual General Meeting (AGM)?

A simple majority of those present constitutes a quorum. Signup and view all the answers

Which type of company resolution is needed to change the name of a company?

Special resolution requiring a 75% majority. Signup and view all the answers

What financial condition must a company fulfill to ensure legal dividend distribution?

It must satisfy the solvency and liquidity test. Signup and view all the answers

What is the effect of a director loan exceeding the prescribed limits under the law?

The company may face penalties and legal action. Signup and view all the answers

Which of the following is NOT a requirement for annual financial statements as per the companies act?

They must be prepared by an internal accountant only. Signup and view all the answers

What role do shareholders play in the approval of major corporate decisions?

They must approve changes through resolution voting. Signup and view all the answers

What must be included in the company's MOI regarding director liabilities?

Directors and past directors are jointly and severally liable for debts incurred during their terms. Signup and view all the answers

Which name is likely acceptable under the companies act for Frank Castle's security company?

Castle Security (Pty) Ltd Signup and view all the answers

Why might Charles's application for his non-profit company have been rejected?

Section 13 requires a non-profit company to be founded by at least three people. Signup and view all the answers

Which of the following best describes the annual general meeting requirements?

All shareholders must be notified at least 21 days in advance of the AGM. Signup and view all the answers

What is a key requirement of shareholder voting during meetings?

Votes may be cast both in person and electronically. Signup and view all the answers

What type of resolution is typically required for significant company decisions?

Special resolutions require a majority of over 75% of shareholder votes. Signup and view all the answers

What is the primary purpose of dividends distribution rules?

To regulate how companies decide the percentage of profits distributed as dividends. Signup and view all the answers

Which statement about director loans is true?

Loans to directors must be disclosed and approved by shareholders. Signup and view all the answers

Study Notes

Question 1

Cartelli Civils (Pty) Ltd needs to provide auditors with their public interest score for their 2024 financial year
Turnover: R 136 000 000
Net profit: R 24 000 000
Ordinary share capital: R 100 000 000
Shareholders with direct interest: 5
Average number of employees: 3 255
Third party liabilities: R 62 740 000
Public interest score: 3 559

Question 2

HUT (Pty) Ltd needs an independent accounting professional to assist with financial statements
An independent accounting professional is: Jack and Jill Accountants and Auditors, registered with SAICA and IRBA, suggested by a regular customer
Other options are not independent due to conflicts of interest.

Question 3

Badger Co (Pty) Ltd is a subsidiary of Bender Ltd, listed on the JSE
Badger Co has a public interest score of 85
Badger Co compiles financial statements internally
Badger Co must have its financial statements audited

Question 4

Stark (Pty) Ltd's public interest score is 62
100% shares are held by one shareholder
The shareholder is the director
Stark independently compiles its financial statements
No audit required

Question 5

Ted, financial manager of Congo Corp (Pty) Ltd, needs to assess audit requirements
Turnover: R 170 million
Total liabilities: R 35 million
Shareholders: 10
Employees start: 150, end: 94
No fiduciary assets
If Ted prepares the financials, the company only needs a review by a registered auditor

Question 6

Sally is performing an independent review on a client
Client's VAT201 returns materially misstated for lower VAT
Sally must report the misstatement as a reportable irregularity to the commission without delay
Sally must provide information on the misstatement

Question 7

Adam Al (Pty) Ltd, a public company, needs to appoint a social and ethics committee
Adam Al's public interest score is 520 for two consecutive years
Adam Al must appoint the committee within one year after reaching the 500-point requirement
Committee must have members be non-executive directors

Question 8

A list of entities related to the client is being compiled
Frog Tree IT (Pty) Ltd, IT consultants, 100% owned by the client's managing director's stepson
This is a related party

Question 9

Ronin Enterprises needs solvency and liquidity testing
Total assets: R 370 million
Total liabilities: R 148 million
Ronin Enterprises will comply with the companies act regarding dividend distribution

Question 10

Requirements for a company to be classified as personal liability
Company's MOI must include that the directors are jointly and severally liable for company debts

Question 11

Frank Castle wants to register a VIP security company
Company names cannot include certain phrases, such as "Defense Force"
"Castle Security (Pty) Ltd" is allowed

Question 12

Charles applied to register a non-profit company, Xavier School for the Gifted NPC
Section 13 of the Companies Act requires non-profit companies to be incorporated by three or more persons
Application rejected due to this requirement

Question 13

Casablanca (Pty) Ltd included requirement for annual audit in its Memorandum of Incorporation
The companies act does not mandate this
Casablanca must adhere to provision in the MOI

Question 14

Kody Inc. is a personal liability company that has been liquidated
In terms of the Companies Act, the directors and past directors are jointly and severally liable for company debts
This liability is not dependent on a clause in the MOI

Question 15

Commission believes that High-Table Trading (Pty) Ltd is trading recklessly
The company has 20 days to satisfy the commission

Question 16

Stig (Pty) Ltd keeps accounting records electronically and shreds paper copies after two years
Stig (Pty) Ltd is not in contravention of the companies act
The companies act allows electronic copies to be kept for more than two years

Question 17

Mr. Pierce, shareholder in Amped Ltd, wants to review company meeting minutes
Amped Ltd is obliged to provide the requested information
Mr. Pierce holds beneficial interest in the company

Question 18

Small Plant Hire (Pty) Ltd has not kept an asset register for several years
Small Plant Hire (Pty) Ltd is in contravention of Section 28 of the Companies Act
The Companies Act requires accurate and complete accounting records to be kept

Question 19

The requirement for financial statements provided to any person is to fairly present the state and affairs

Question 20

Spektree (Pty) Ltd, financial year end is 28 February 2024
Financial statements should be prepared by 31 August 2024

Question 21

Bluebird Couriers Ltd provided remuneration to directors
The total value that must be included in the financial statements is R 18 158 000.00

Question 22

Company name followed by (RF) indicates restrictions of trade

Question 23

Eszray (Pty) Ltd needs to fulfil requirements before granting a loan
The board requires a special resolution
The loan must be granted and paid within two years.

Question 24

Liquid Veg (Pty) Ltd must pay declared dividends
Dividends are due within 120 days

Question 25

Boabab Ltd is sending out notice of annual general meeting
A copy of the annual financial statements should be included

Question 26

Rock Lee Ltd needs a quorum for shareholders' meeting
5 shareholders needs to be present for the meeting

Question 27

Shareholders in Donald Ltd want to amend MOI
A special resolution is needed to amend the MOI

Question 28

Ineligible or disqualified from being a director
Shareholders cannot be directors of their own company

Question 29

Aurelia, director of Pompei Excavators (Pty) Ltd has a financial interest in Young Milo (Pty) Ltd
Aurelia must disclose her interest

Question 30

Abu, CEO of Diamond in the Rough, has been informed that his brother, a director, may be involved in fraudulent activities
Abu is obligated to report the information to the board, as soon as possible

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Description

This quiz assesses your understanding of public interest scores and the requisite auditing standards as they pertain to various companies. It covers financial figures and the importance of independent accounting professionals in the auditing process. Test your knowledge and application of these concepts in a practical context.