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FACULTY/COLLEGE College of Business and Economics

SCHOOL School of Accounting
DEPARTMENT Department of Accountancy
CAMPUS(ES) APK
MODULE NAME Governance and Control 2A
MODULE CODE GAC02A2
SEMESTER First
ASSESSMENT OPPORTUNITY, Assessment Opportunity 1
MONTH AND YEAR MARCH 2022

ASSESSMENT DATE 18 March 2022 SESSION 09:00 to 10:30

ASSESSOR(S) MS P RAMA
MS S VENTER

MODERATOR(S) DR R SMITH
DURATION 1,5 hours TOTAL MARKS 60

NUMBER OF PAGES OF QUESTION PAPER (Including cover page) 7

INFORMATION/INSTRUCTIONS:
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 This paper must be written while using The Invigilator App. See the next page for
information in this regard.
 This assessment consists of 2 Questions
 Read the questions carefully and answer only what is required.
 All the examination regulations of the UJ and the policy document for students of the
Department of Accountancy will apply during this assessment.
 If you upload an incorrect script or forget to upload a specific question, your response will
NOT be accepted under any circumstances.
 Please note that you will be penalized for late submission through the google form.
 Ensure that you submit your answer to the assessment timeously on 18 March 2022 at
or before 10:30am
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Dear GAC Student,

Please open The Invigilator App that you downloaded from the Apple App Store, Google
Play Store or Huawei App Gallery.

Sign into the application with the credentials you created when you signed up for the app.

Just before you start your test, scan the following QR Code:

Please ensure that you leave the application open for the duration of the test. You are NOT
allowed to leave or to minimise the application. We as lecturers will know when you leave
the application.

Please ensure that you request your 4-digit exam code on the Invigilator app. Thereafter
please enter the 4-digit code as the answer to question “AO1 – Invigilator App OTP”.

You can click the "Finish Assessment" button in the app if you finish early.

Ensure that your phone's media volume is turned up in order for you to hear the
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APPLICATION PLEASE CONTACT THEIR TECHNICAL HELPDESK AT 073 505 8273.

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QUESTION 1 20 MARKS

Go Green Ltd is medium sized recycling company and is listed on the JSE.

As the leading recycler in South Africa, Go Green collects approximately 600,000 tonnes
of recovered recyclables per annum. Go Green runs numerous pick-up programs via
schools, communities, and offices - not only do these initiatives raise recycling awareness
and create income opportunities but to also push recycling levels to new heights.

Go Green is committed to sustainability, and ensuring that strong governance is in place.

Go Green has the following Companies Act matters below, and needs your assistance in
resolving these matters.

The company secretary sent you the document below.

Go Green Ltd

The board of Go Green comprises of 15 directors, the majority of which are

independent non-executive directors. Go Green has the following shareholders:
Shareholder Percentage of shares
held

Mr. Williams 15%

Ms. Naaido 15%

Mrs. Nguni 20%

YouGo (Pty) Ltd 23%

Mr. Hao 20%

Ms. De Villiers 7%

NB: 1% of shares=1% of voting rights.

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Go Green held the following meetings during the year:

Board meeting
The board held in total three board meetings in the year. The last meeting was called by
the chairperson after one of the executive directors requested a meeting in order to
discuss the contract of collection and removal of recycled material to YouGo (Pty) Ltd.
Unfortunately the chairperson could not make to the board meeting and requested Mr.
Peters to chair the meeting on his behalf. Mr. Peters owns 10% shares in YouGo (Pty)
Ltd. He chaired the meeting successfully. At the end of the meeting he reviewed the
minutes. The company secretary was present at the meeting, however the chairperson
indicated there was no need to record the meeting.

Shareholders meeting
Go Green convened five shareholders meetings for the year. The first meeting was called
by the board upon the request of Ms. De Villiers only. Ms. De Villiers stated that she
wants to bring up a matter of urgency. As a result the notices of the meeting was sent
out to all shareholders and the meeting was called to be held within five days. Because
it was such short notice, only Ms. De Villiers and Mr. Naidoo were able to attend. As Ms.
De Villiers mentioned, the matter was urgent therefore the meeting convened and
commenced accordingly.

Audit:
Mr. Vere Millican the Financial Manager indicated that Go Green does not require an
audit, as they have a current PIS Score of 287.

QUESTION 1 – REQUIRED 20 MARKS

(a) Identify and explain the Companies’ Act contraventions from the above 20
scenario and provide recommendations for each contravention.

Use the format below:

Contravention Recommendation
Conclusions are not required for each matter identified.

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QUESTION 2 40 MARKS

SA PIPING Pty Ltd (hereafter SA PIPING) is a supplier of High-Density Polyethylene

(HDPE) pipes and piping projects. It is their vision to be the preferred one-stop supplier of
HDPE pipes, fabricated plastic solutions, piping projects and related products in Africa.
Their values are excellence, transparency and trust.
Their board is supported by nomination, risk, audit and remuneration committees. The
board is comprised of the following individuals:

Candidate Details Candidate Background

Tarryn Proctor Ms. Proctor works as a marketing manager at FamousBrands.
She is also the daughter of Mr Antonio Proctor, who is a majority
shareholder of SA PIPING.
Asheel Singh Mr. Asheel Singh is a known environmentalist in the plastics
industry. He is a full-time sustainability consultant at GreenEarth
Consultants. It is his vision to create a practical solution for SA
PIPING towards commitment to the sustainability development
goals.
Nondumiso Madondo Ms. Nondumiso is the founder of a successful construction
company, KNSTRKT, and was just awarded the accolade of
businesswoman of 2021 award by the JHB Commerce Board.
She likes to be seen as an independent woman, as she spends
all her time building this business. KNSTRKT is also a major
customer of SA PIPING.

Other information:

SA PIPING had been struggling to secure the timely supply of some of the raw materials
that are necessary in the production of these pipes. If the correct quality and quantities of
raw material is not supplied in time for production, SA PIPING incur big losses.

To solve this problem, SA PIPING stepped into an agreement with Finders Raw Material
Sourcing (hereafter FINDERS). According to the agreement, it is the responsibility of
FINDERS to source the material according to the production timelines at favourable prices.

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For the suppliers that FINDERS secure raw material from, FINDERS gets a small margin
of the total sale as payment.

Mr. Max Khumalo is a creditors clerk at SA PIPING. He is the only employee in the creditors
department. It is the understanding of SA PIPING that Mr. Max Khumalo still actively works
on sourcing the best suppliers. FINDERS is only supposed to step in in the situations where
a shortfall is expected.

The owner of FINDERS has contacted Mr. Max Khumalo to offer him a cut of all the SA
PIPING income on their books. All he must do is direct all the suppliers through FINDERS,
instead of processing the suppliers that he sourced himself directly through SA PIPING.

A supplier might reach out to Mr. Khumalo and offer him raw materials at R20/kg. Instead
of documenting the offer at R20/kg in SA PIPING’s Enterprise Resource Management
(ERM) system, he would direct them to FINDERS. FINDERS then send SA PIPING an
invoice at R20/kg. SA PIPING then pays the supplier but FINDERS also gets a cut for the
referral.

QUESTION 2 – REQUIRED 40 MARKS

(a) Explain the two sides of the ethical dilemma faced by Mr. Khumalo. 2
(b) Through the application of the Quick Test, advise Mr. Khumalo on the 6
ethicality of the agreement.
(c) With reference to the principles contained in the Ethics Triangle, 10
discuss, and conclude on the ethicality of the agreement between
FINDERS and Mr. Khumalo. Discuss your answer from the vantage
point of Mr. Khumalo.
(d) List two ways in which SA PIPING can manage the risk of the unethical 2
behaviour.

(e) Discuss and conclude whether the governing body is in line with the 15
KingIV™ principles of good corporate governance.

(f) An internal review has revealed that no succession planning has been 3
done at SA PIPING. Identify who needs to take responsibility for this
function.

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Presentation and Interpretation Marks 2

TOTAL FOR THE PAPER 60 MARKS

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