Module code: AIC22A2

Unit number & name: Unit 3 – Companies Act

Due date: Week 3 of Unit 3 – week of
8 April (Tutorial for submission)

Tutorial Question

Part A
The shareholders of Jika Jika (Pty) Ltd, a profit company which sells a large range of music
related products, have recently included a clause in its MOI which requires that the company
has its annual financial statements externally audited. The directors are considering the
following candidates for the appointment:
 Lindiwe Muthambi, a registered auditor and daughter-in-law of Phillimon Muthambi.
Phillimon Muthambi is a former financial director of Jika Jika (Pty) Ltd, he resigned
two years ago, and has since been running a successful practice specialising in external
audits and independent reviews. Lindiwe however is a sole practitioner and does not
work for his practise.
 Siya and Co, a small financial services partnership which does all of Jika Jika (Pty)
Ltd’s company secretarial work. This audit role would be filled by Wiseman Tyu, a
chartered accountant and partner in the business.
 Pamela Naidoo, a chartered accountant, and financial consultant who has been working
on a project for the last year to expand Jika Jika (Pty) Ltd’s business into Africa.

Required
In terms of the Companies Act, discuss the eligibility of each of the listed candidates
(individuals or firm) for appointment as an Auditor. (6)

Part B

The auditor of Moratiwa Ltd resigned unexpectedly in the company’s AGM this year. It is
understood that the auditor has been considering to resign for at least 6 months before the AGM
but for some reason had not mentioned anything to the shareholders or directors until at the
AGM itself.

Following the auditor’s resignation, the company struggled to find a replacement and 3 months
after the AGM the directors decided to elect Mr. Pitso Molefe CA (SA) as an emergency
appointment. Mr Molefe’s father was a director for many years but retired 2 years ago due to
age. It was thus easier for the directors to contact Mr. Molefe senior to ask him to convince his
son, Mr Pitso Molefe, to help the company with this desperate situation that they are in.
Fortunately, Mr Pitso Molefe agreed and accepted appointment as auditor. He is honoured to
be working with his dad’s old friends, they worked well with his father for many years and
become friends and some are like uncles and aunts to him.
Module code: AIC22A2
Unit number & name: Unit 3 – Companies Act
Due date: Week 3 of Unit 3 – week of
8 April (Tutorial for submission)
Mr. Pitso Molefe completed his articles with a large audit firm recently and has already
completed his registration with SAICA and thus can use the designation CA (SA). He also
submitted his application to register with IRBA and paid the required fee. He is expecting a
formal reply from IRBA within the next 2 months.

Required:
Identify actions in the scenario above that are against the requirements of the Companies Act
(6)