Independent Audit
What Is an Audit?
Companies appoint an auditor to give reasonable assurance that the Annual Financial Statements are free from material misstatement. This objective review increases the value and credibility of the data and information produced by management and gives users assurance that they can rely on the information presented to them. Reasonable assurance is the confidence the auditor has in their findings, after exercising professional and due care, that the Annual Financial Statements are free from material misstatement.
A material misstatement is any error or omission in the Annual Financial Statements that is material enough to affect the shareholders, investors, or any other users’ opinion or action towards the company.
How Audits Are Conducted
We provide a specialist “one-stop shop” service that now includes performing audits for our clients. Our process is simple, following the guidelines set out by the International Standards Auditing. We make a selection of transactions which we verify through inspection of supporting documentation and ensuring compliance with International Financial Reporting Standards. As a dedicated accounting, tax and legal practice, we have over 65 full-time professionals including tax attorneys (thus we offer legally privileged services, not obtainable with normal accountants or tax specialists), chartered accountants, professional accountants and Master Tax Practitioners. This allows us to assist clients from company registrations right through to financial statements and submission of all tax-type returns.
Who Needs to Be Audited
With the implementation of the new Companies Act, No. 71 of 2008, the requirement that all companies are to be audited changed slightly, with Independent Reviews being added to the mix.
Now only Public Interest Companies and State-Owned Companies are required to be audited by the Companies Act, No. 71 of 2008.
Companies can also elect to have a voluntary audit carried out on their Annual Financial Statements.
How Do I Know If My Company Needs to Be Audited?
If you are not a State-Owned Company, you will need to determine if you fall into one of these categories:
- The company holds assets in a fiduciary capacity for persons who are not related to the company, and the aggregate value of such assets held at any time during the financial year exceeds R5 million.
- Your company had the Annual Financial Statements compiled internally (someone employed within the company) and the company's public interest score is over 100.
- Your company had the Annual Financial Statements compiled independently (by an external party to the company) and the company's public interest score is over 350.
How Is the Public Interest Score Calculated?
- A number of points equal to the number of average employees of the company during the financial year
- One point for every R1 million (or portion thereof) of third-party liability of the company held at financial year end
- One point for every R1 million (or portion thereof) of turnover of the company during the financial year
- One point for every person who has a direct or indirect beneficial interest in the company's issued securities
Once tallied, you will be able to determine if your company is liable to an audit should it fall into the categories listed above.
If My Company Does Not Fall Into a Category Above
Your company will then either be subject to an Independent Review or a Compilation.