Answer to Question #284876 in Accounting for Bea

Question

Calculate the public interest scores in order to consider whether the following companies should be audited or not:

ABC (Pty) Ltd (ABC). Mr. X and Mr. Y each hold 20% of the shares of ABC and the remaining 60% of the shares are held by 40 other shareholders. The company employs an average workforce of 165 employees. The financial statements of the company are compiled by Mr. Z, a partner at the accounting firm Creative-Accountants-R-Us. ABC had a turnover of R185,5 million and the only liability of the company is its bank overdraft of R7 million. 

Answer 1

In terms of Regulation 26(2) of the Act, the PI Score is calculated as the sum of the following:

• A number of points equal to the average number of employees of the company during the financial year;
• One point for every R1 million (or portion thereof) in third party liability of the company at the financial year end - This is the money owed in terms of loans, debentures, and other financing;
• One point for every R1 million (or portion thereof) in turnover during the financial year - if the turnover is half a million rand, score ½ point;
• One point for every individual who, at the end of the financial year, is known by the company to directly or indirectly have a beneficial interest in any of the company’s issued securities. - this will include shareholders, beneficiaries of a trust where a trust is a shareholder and other stakeholders. As more companies are choosing to establish Trusts with multiple beneficiaries, this could push the PI Score of these companies up substantially.

 the public interest scores=165+7+186+2+40=400

Score 350 point or more

- Must have Audited Financials