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The Johannesburg Securities Exchange (JSE) Refer to paragraph 1 - NSC Accounting - Question 4 - 2022 - Paper 1
Question 4
The Johannesburg Securities Exchange (JSE) Refer to paragraph 1. 1. Explain why companies might want to be listed on the JSE. 2. Explain why the JSE would not tol... show full transcript
Worked Solution & Example Answer:The Johannesburg Securities Exchange (JSE) Refer to paragraph 1 - NSC Accounting - Question 4 - 2022 - Paper 1
Step 1
Explain why companies might want to be listed on the JSE.
Answer
Companies may seek to list on the JSE for several reasons. Firstly, it provides access to capital by tapping into a large pool of potential investors, which can enhance their growth prospects. Secondly, listing on the JSE increases the visibility and prestige of a company, making it more appealing for investment and business partnerships. Additionally, being listed facilitates compliance with regulations, ensuring transparency and accountability in financial reporting.
Step 2
Explain why the JSE would not tolerate 'incorrect, false and misleading financial results' from companies that are listed.
Answer
The JSE would not tolerate incorrect, false, or misleading financial results because it undermines investor confidence and the integrity of the market. Accurate financial reporting is fundamental to ensure that investors can make informed decisions. Moreover, any deceptive practices can lead to legal repercussions for the company and damage the reputation of the JSE itself, highlighting the need for trust and reliability in the public financial system.
Step 3
Explain the difference between a qualified audit report and a disclaimer of opinion audit report.
Answer
A qualified audit report indicates that the auditor has some concerns or reservations about certain areas of the financial statements but still provides a valid opinion. In contrast, a disclaimer of opinion report means that the auditor was unable to gather sufficient evidence to form an opinion on the financial statements, often due to significant limitations or uncertainties.
Step 4
As a concerned shareholder, what questions would you raise at the AGM? Provide THREE different questions. In EACH case explain an appropriate reason.
Answer
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What measures are being taken to ensure better corporate governance in light of recent events? This question is crucial as it addresses the need for transparency and accountability within the company.
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How does the board plan to improve the financial reporting processes to prevent misleading results? This seeks reassurance about the integrity and reliability of the financial information provided to shareholders.
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What steps have been implemented to assess the qualifications and experiences of newly appointed directors? This question highlights the importance of having capable leadership that can guide the organization towards better governance and performance.