INDEPENDENT REVIEW ENGAGEMENTS
In order to promote entrepreneurship and keep up with the international standards, the South African companies act of 2008 removed the audit requirement to certain companies. In terms of the previous companies act, all the companies were required to be audited, which was very costly for most small and medium sized companies.
Currently certain companies are exempt from audit and can have their financial statements independently reviewed by an accounting professional. And this is very cheaper assurance engagement as compared to an audit.
What is an Independent Review?
An Independent Review is an assurance engagement where the independent reviewer provides assurance on a set of annual financial statements, indicating that nothing came to the reviewer's attention to cause them to believe that the financial Statements are materially misstated.
Which companies must have their financial Statements independently reviewed?
- Companies with a Public interest (PI) Score between 0-349
- Owner-Managed Companies with Public Interest Score less than 350 and voluntarily requiring Independent Review services.
- 1 point for each employee or the average number of employees throughout the year
- 1 point per million rand of third party liability. This is the money owed in terms of loans, debentures, and other financing
- 1 point for each million rand of turnover during the financial year. If the turnover is half a million rand, score ½ point
- 1 point for every individual who, at the end of the year, is known to have a direct or indirect beneficial interest in the company. This will include shareholders, beneficiaries of a trust where a trust is a shareholder and other stakeholders