As a business owner at the end of your financial year, you have to decide if your company’s annual financial statements (AFS) need to be auditing OR independently reviewed.
The Companies Act, No 71 of 2008 together with the Companies Regulation 2011 determines whether to audit or review the AFS taking into consideration the company Public Interest Score (PIS), Memorandum of Incorporation (MOI), ownership structure, AFS compilation among other things.
The company’s AFS has to be audited if:
1) It is a public company or a state-owned company;
2) It is required to be audited by its MOI;
3) It holds assets in a fiduciary capacity greater than R5 million for an unrelated party at any time during the financial year;
4) It has a PIS as calculated that is greater than 350;
5) It has PIS as calculated that is at least 100 but less than 350 and its AFS are not prepared/compiled by an independent accounting professional;
6) It has voluntarily chosen to be audited.
The company’s AFS has to be independently reviewed if:
1) It has PIS as calculated that is at least 100 and its AFS are prepared/compiled by an independent accounting professional.
2) It has a PIS less than 100 and shareholder/s that is/are not directors of the company i.e. it is not owner-managed.
It is important to note that an independent review must be done by an independent professional from the one who was involved in preparing the AFS.
So you will ask yourself why you need audited or reviewed AFS. There are so many uses of AFS amongst them is when you submit the company annual returns to CIPC or applying for funding from financial institutions or submitting tender documents or business plan or applying for BBBEE ED/SED support or funding or for your own understanding of your business financial performance.
Don’t risk non-compliance or missing business opportunities by not complying with the relevant Companies Act or Regulations.
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