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Assurance: Independent Reviews

The Tax Shop provides a comprehensive range of specialist business advisory services, including independent reviews to dynamic small and medium-sized entities, as well as to large businesses:

  • Accounting and financial advice
  • Payroll processing reviews
  • Taxation compliance reviews
  • Value added tax reviews
  • Corporate governance reviews
  • Due diligence
  • Valuations
  • Strategic solutions
  • Business risk reviews
  • Independent reviews

Traditionally, all companies have been required to be audited.  The new Companies Act has introduced a new system of determining whether a company is required to be audited or whether it has to have an independent review. All companies are now required to calculate a “Public Interest Score” (PIS) at the end of each financial year to determine whether or not they will require audited financial statements and which financial reporting standards will apply.  For companies, the PIS is calculated as the sum of the following:

1. A number of points equal to the average number of employees of the company during the financial year.

2. One point for every R 1 million (or portion thereof) in third-party liabilities of the company at the financial year end.

3. One point for every R 1 million (or portion thereof) in turnover of the company during the financial year.

4. One point for every individual who, at the end of the financial year, is known by the company -            

  • in the case of a profit company, to directly or indirectly have a beneficial interest in any of the company’s issued securities; or
  • in the case of a non-profit company, to be a member of the company, or a member of an association that is a member of the company.

The requirements for companies to have their financial statements audited are as follows:

1.    Any state-owned company (SOC).

2.    Any public company (LTD).

3.    Any profit or non-profit company if, in the ordinary course of its primary activities, it 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 R 5 million (activity test). It is important to note that the activity test relates to the primary activities of the company, not incidental/resulting activities, and specifically states "in a fiduciary capacity".  By way of example, assume a company operates as a legal practice - the holding of funds in trust is incidental to the primary business and not in a fiduciary capacity.  The Companies Act would thus not require an audit on this basis.

4.    Any non-profit company, if it was incorporated -

  • directly or indirectly by the state, an organ of state, a state-owned company, an international entity, a foreign state entity or a foreign company; or
  • primarily to perform a statutory or regulatory function in terms of any legislation, or to carry out a public function at the direct or indirect initiation or direction of an organ of the state, a state-owned company, an international entity, or a foreign state entity, or for a purpose ancillary to any such function.

5.    Any other company whose public interest score in that financial year is:

  • 350 or more; or
  • at least 100, if its annual financial statements for that year were internally (as opposed to independently) compiled.

6.    Any company required to be audited by specific industry authorities e.g. Estate Agency Affairs Board and the Law Society requires an annual audit to be performed on the trust accounts of estate agents and attorneys respectively.

7.    Any company which chooses to be audited.

Below is a decision tree to help you work out what process you need to go through in terms of having an audit or an independent review.  


So what does this mean for you as a client?  If your business is a (Pty) Ltd or a close corporation with a PIS of less than 350 then you don’t require an audit anymore and may only need an independent review.  This will save you a lot of audit fees you used to have to spend as well as the hassle of having to go through a full audit as an independent review is much less onerous and time consuming.  In addition to the independent review assurance services, we also provide audit services by an regulatory auditor registered with IRBA should this be required.

What next?

Use our online request form to request any service including the service listed on this page. A Tax Shop professional will make contact you with you shortly thereafter.