Independent Reviews Instead of Full Financial Audits
Independent reviews are similar to audits. Independent reviews are required to be carried out on South African companies in terms of the New Companies Act of 2008, which came into effect on April 1, 2011. Many companies prefer to have an independent review instead of a full audit, which can be costly and complicated. If a full audit must be carried out, only certain auditors with specific qualifications and experience are allowed to undertake the process. In cases where an independent review is allowed, the accountants that conduct the procedure may not have to conform to all the requirements.
Due to the introduction of the New Companies act of 2008, the Companies Act of 1973 and the Corporate Laws Amendment Act of 2006 were replaced with the concept of independent review instead of audit. This is currently an acceptable form of financial statement auditing and serves to benefit private companies in particular. When the Act was introduced, the formation of new CCs was no longer permitted. Any CCs already in operation have been allowed to continue.
Having a financial review instead of an audit of the financial statements can save businesses millions of rands. The traditional method of having financial records audited under the New Companies Act of the past was often a time-consuming and costly process. Only public companies now need to be audited instead of reviewed. This means that as many as 90% of companies that previously had to be audited are now exempt from audit and can opt for independent review instead. This does not mean that private companies are not expected to prepare financial statements. They still have to do this, but the latest regulations will determine the financial reporting standard.
The professional to be trusted with your company’s independent review must be a registered member of a professional accounting body, and that body must be part of the International Federation of Accountants (IFAC). International financial reporting standards must be adhered to during the review, which must also be carried out in terms ISRS4400 (International Standard on Related Services).
Entrusting your private company’s independent review to a professional accountant is made an easy task when you work with us at Tax Leaders. Our experienced and highly qualified accountants will advise you professionally on your financial statements and what to expect during independent review. To chat to one of our consultants, or to learn more about the process, contact us via email or telephone today.