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Risk assessment of Foodies Limited By Tamanna Naik

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Background of the client Directors of the company Events negatively affecting the reputation Information from the previous auditor Impacts of Covid-19 on the company Ratio analysis Conclusion: should Foodies Ltd. Be accepted as a client? Risk  associated with some of the directors

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A public company. Founded in 1970 by Harry & Larry Buns Belongs to the Entertainment and Food Industry Headquarters situated in Sandton, Johannesburg Operates across 3 main divisions: Fast Food Fine-dining Beverage  Main aim: to spread the love of food

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Executive Directors & their position on the Board of Directors           Experience Mr  A  Coetzer   (CEO and Chairman of Board)  CA(SA)  CIMA  CFA  Mr  E Grobler  (CIO) Wrote books on disruptive technology and block chain.  Mr  C  Amod   (FD) Recently qualified CA, completed articles December 2019

Non-Executive Directors & their position on the Board of Directors          Experience Mr  F  Sello (External Director)  CA(SA)  Mr  B Khoza (External Director)  Retired professional Chef

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Mr. Sello- Non-executive director  Has a shareholding of 2% in Foodies. Gave the idea to initiate an unethical business operation.    Mr. Grobler - CIO Reckless spending during the Covid-19 lockdown period. Mr. Amod - Financial Director  Newly appointed – 1 January 2020. Replaced the very experienced, Mr D de Franca, who has been the FD for 20 years. Built a good friendship with the engagement partner as an Article Trainee.

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Involvement of former executives in an accounting fraud. Illegal sale of alcohol (Mr.  Sello  being the “mastermind” behind this).  Retrenchment of employees.

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40% audit fees still outstanding. Irregularities reported – leading to a qualified audit report. Many misstatements identified.

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Covid-19 has affected the fine-dining division of Foodies Ltd. As a result, the company decides to down-size by closing thus division. Some legal and accounting considerations before the down-size:  Careful retrenchment of employees Outsourcing tasks Profitability of fine-dining

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The company is not illiquid as it cannot easily pay its current liabilities. High risk determined by the debt-to-equity ratio leaves the company insolvent. Profitability of the company is concerning as it reflects the inability of the company  to generate profits.

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Should Foodies Ltd be accepted as our client…

WE CANNOT ACCEPT  THIS COMPANY AS OUR CLIENT. (In my opinion) Reasons: Lacks integrity  Poor performance from the directors Reputation at risk Ratio Analysis reflecting only negatives about the company’s finance.

Risk assessment of Foodies Limited By Tamanna Naik

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