cables (Proprietary) Limited was formed .5 years ago by its current managing
director Peter Jones. Cables (Proprietary) L -rred has 15 members (all of whom are
individuals) and Pete is the majority shareicider. Cable (proprietary) Limited is a
cable manufacturing business and has long -term contracts with local government
bodies and mtnes for the supply of cables Tne company also supplies to large and
small building contractors throughout Namibra. The company has a branch in each
province of Namibia from where the manufactured cables are sold and distributed.
The company’s memorandum of incorpoi’ation requires that its annual ftnancial
statements should be audited. Three years ago John Green was appointed as the
company’s external auditor by the company’s members at an annual general
meeting
Jake Jones, Pete’s son was appointed as Cables (Proprietary) Limited,s Financial
director on 31 May 2021. Jake acquired a Btech degree at Namibia University of
Science and Technology, after he worked in a hotel in Johannesburg for a couple of
years He is 27 years of age. He started working at Cables Limited on 1’t May 2021
Jake and you have been friends since school although he is a few years younger
than you
The finalisation of the audit of Cables (Proprietary) Limited for the year ended 30
June 2020 was delayed due to the diflerences of opinion between the auditor, John
Greene, a sole practitioner, and Pete regarding the accounting treatment of certain
structured financing transactions that the company entered into during May 2020. On
31 January 2020 John Greene eventually issued an unqualified audit opinion on the
financial statements of Cables (Proprietary) Limited for the year ended 30 June
2020.
You are aware of the fact that Cables (Proprietary) limited has changed auditors
regularly over the period of its existence and that the reason for these changes has
usually been differences of opinion between the auditors and management regarding
compliance and accounting standards

You are a partner in a medium sized auditing firm with offices with offices in all the
large cities in Namibia. Jake approached you at the beginning of February 2O20 and
requested that you take over the statutory audit appointment of Cables (Proprietary)
Limited.
During your conversation with Jake, you learned the following
1. Each branch controls its own sales and accounts receivables while purchases and
accounts payables are controlled by the head office.
2. Pete fully supports the change in auditor, while the other members of the
company are not aware of the planned change.in auditor.

Required:
(a) Explain giving reasons, the issues which you as tne new auditor should
consider before you accept the appointment offei’ed to you by Jake
(10 marks)
(b) Set outthe procedures which you as the new auditor should follow in terms of
SAICA Code of professional Conduct to replace the exrsting auditor (5 marks)
(c) List (5) five benefits of planning an audit (5 marks