Chapter 1 Flashcards
What is the main objective of the chapter on Internal Auditing?
To understand the business environment in the context of a simple business form, such as a sole trader, developing into a listed company
The chapter emphasizes the evolution of various business structures and the role-players involved.
What hypothetical organization is used throughout the textbooks to illustrate aspects of the business environment?
Sivafunda
Sivafunda starts as a sole trader and expands into a listed company registered on the South African stock exchange.
Who is James Khumalo?
A second-year student who received a bursary to study at a South African University
James faced challenges in covering his daily living expenses and textbooks.
What led James Khumalo to attend a short course on entrepreneurial skills?
His bursary funds did not cover his daily living expenses and textbooks
He struggled financially during his first year on campus.
What gap in the market did James identify?
Campus kiosks and cafeterias were very expensive for students
Many students could not afford to use these facilities.
What method did James use to determine the feasibility of his kiosk business?
An informal survey amongst his fellow students
The survey aimed to assess interest in affordable snacks and meals.
What type of business did James Khumalo decide to set up?
A movable street-food kiosk named Sivafunda
The name means ‘we learn’ and was established in front of the campus.
Who did James approach for start-up capital?
His lecturer, Peter Mahlangu
Peter was an entrepreneur who admired James’s initiative.
What support did Peter Mahlangu provide to James?
An interest-free loan and a small second-hand caravan
The caravan was converted into a kitchen for the kiosk.
What items did James purchase with the loan from Peter?
Utensils, packaging material, and food supplies
These were necessary for running his street-food kiosk.
Who are the two directors of the company?
James (executive director) and Peter (non-executive director)
The board consisted of these two directors.
When is the financial year for Siyafunda?
1 March to 28 February
This coincides with the tax year.
What incident prompted James to take immediate action?
An explosion of a gas bottle at a kiosk causing serious injury to an employee
James ensured the employee received emotional and physical attention.
What concept introduced in James’s course is crucial for business sustainability?
Governance
Proper governance incorporates the needs of all stakeholders.
List key elements included in the basic governance framework developed by James.
- Regular board meetings
- Regular meetings with staff
- A risk management framework
- Establishing various policies and procedures
- Human resource-related activities
- Accounting and finance-related activities
These elements are essential for a private company’s governance.
What was the outcome of the strategic planning session held by the directors?
The need for business expansion and diversification was recognized
This led to a discussion about increasing resources.
What roles did James and Peter assume after the strategic planning session?
- James became the managing director (CEO)
- Peter became the chief operating officer (COO)
Their new roles focused on business strategy and marketing.
Who was appointed as the chief financial officer (CFO)?
William Naidoo
This role was crucial as the company employed over 50 full-time employees.
What new division was established in the company?
A manufacturing division
This division was responsible for centrally producing all food items.
