26 Oct Do I need an audit?
Do I need an audit?
The new Companies Act of 2008 reduces the onus for most small and medium sized businesses to have their financial statements audited on an annual basis.
An audit is conducted by a registered auditor who expresses an opinion or gives assurance that an entities financial statements accurately reflect its financial position. Audited financial statements are expensive as a business is contracting with a professional auditor to render this service.
One can determine if their business requires an audit by calculating your Public Interest Score (“PIS”):
- 1 point for each million Rand of revenue per annum;
- 1 point for each employee;
- 1 point for each shareholder who is an individual or trust;
- 1 point for each million Rand of liabilities to third parties that the business has at year end.
The above is applicable for both Close Corporations and Private Companies.
Businesses that score the following points require:
- greater than 350 points – audited financials are required
- between 350 and 100 points – an independent review of your financial statements – a CA(SA) can perform this assurance work
- less than 100 points – no audit or review required.
Where the shareholders and directors are different people (not owner managed), an independent review should be conducted even if the PIS is below 100 points.
See what your business requires by using this online calculator or chatting to our staff at Office Badger: