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    Country by Country Financial Reporting and Auditing Framework

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    South Africa, Horwath Leveton Boner (prepared October 2014)

    Preparation of and Filing of Statutory Financial Statements

     

    A company in South Africa must prepare annual financial statements within six months after the end of its financial year. An External Profit Company (foreign company doing business in SA) must register with the Companies and Intellectual Property Commission, but is not a company in terms of the Companies Act of South Africa and is not required to prepare or lodge annual financial statements. An External Profit Company will however be required to prepare annual financial statements for tax purposes.

     

    A company listed on the Johannesburg Stock Exchange (JSE) is required to produce annual financial statements within three months after the end of its financial year in terms of the JSE Listing Requirements. If the annual financial statements are not completed within the 3 months then the company may release Reviewed Financial Results and will have a further three months in which to release its annual financial statements.

     

    All companies whose annual financial statements are required to be audited in terms of the requirements of the Companies Act of South Africa must lodge their annual financial statements with the Companies and Intellectual Property Commission. This requirement will be extended to include all annual financial statements prepared by companies as soon as the Companies and Intellectual Property Commission's systems are capable of accommodating the process.

     

    Financial Reporting Framework

    • State owned company - International Financial Reporting Standards and the Public Financial Management Act
    • Listed public company - International Financial Reporting Standards and the JSE Listing Requirements
    • Unlisted public company - International Financial Reporting Standards or International Financial Reporting Standard for Small and Medium-sized Entities
    • Private company - International Financial Reporting Standards or International Financial Reporting Standard for Small and Medium-sized Entities or SA Generally Accepted Accounting Practice
    • Private company with a public interest score below 100 points who internally prepare their own annual financial statements - No prescribed framework
    • Private company with a public interest score above 350 points where all shareholders are also directors - International Financial Reporting Standards or International Financial Reporting Standard for Small and Medium-sized Entities
    • Private company with a public interest score between 100 and 350 points where all shareholders are also directors who internally prepare their own annual financial statements - International Financial Reporting Standards or International Financial Reporting Standard for Small and Medium-sized Entities or SA Generally Accepted Accounting Practice
    • Private company with a public interest score below 100 points where all shareholders are also directors who internally prepare their own annual financial statements - No prescribed framework

    Minimum Level of Attestation Required for Companies Registered in South Africa

    • Any company which states in its Memorandum of Incorporation that it must be audited will require an audit.
    • State owned company - Audit
    • Public company (listed or unlisted) - Audit
    • Subsidiaries of listed company - Audit
    • Private company which holds more than R 5 million in a fiduciary capacity - Audit
    • Private company with a public interest score above 350 points - Audit
    • Private company with a public interest score between 100 and 350 points who do not internally prepare their own annual financial statements - Independent Review
    • Private company with a public interest score between 100 and 350 points who internally prepare their own annual financial statements - Audit
    • Private company with a public interest score below 100 points - Independent Review
    • Private company with a public interest score between 100 and 350 points, where all shareholders are also directors and the company internally prepares its own annual financial statements - Audit
    • Private company with a public interest score below 100 points, where all shareholders are also directors and the company internally prepares its own annual financial statements - No attestation requirement
    • Private company with a public interest score below 350 points, where all shareholders are also directors and the company does not internally prepare its own annual financial statements - No attestation requirement
    • External Profit Company  - No attestation requirement

    Audit Appointment, Rotation and Joint Audits

    Upon its incorporation, and each year at its annual general meeting, a public company or state-owned company must appoint an auditor. A company which is required to be audited in terms of the regulations of the Companies Act of South Africa or a company which is required to be audited in terms of its Memorandum of Association must appoint an auditor when the company is incorporated or at the annual general meeting when the criteria giving rise to the audit are first satisfied.

     

    In terms of the Companies Act of South Africa, the same individual may not serve as the auditor or designated auditor of a company for more than five consecutive years. The Independent Regulatory Board for Auditors in South Africa (IRBA) further regulates the rotation of auditors in terms of the Code of Professional Conduct for Registered Auditors. An individual may not serve as a key audit partner of an entity that is a listed entity or an entity that is required to be audited by regulation or legislation for more than 7 consecutive years.

     

    In a joint audit the auditor rotation is required to be managed in such a way so as to ensure that both auditors do not relinquish office in the same year.

     

    Auditing Standards

    South African auditors must register with the Independent Regulatory Board for Auditors (IRBA) and are required to subscribe to the standards adopted by the IRBA. Audits are conducted in terms of International Standards on Auditing. These standards are set by the International Auditing and Assurance Standards Board (IAASB) which is an independent standard-setting body working under the auspices of the International Federation of Accountants (IFAC).

     

    Ethical Framework

    South African auditors must register with the Independent Regulatory Board for Auditors (IRBA) and are required to subscribe to the standards adopted by the IRBA. The Independent Regulatory Board for Auditors (IRBA) in South Africa has adopted the Code of Ethics for Professional Accountants as set by the International Ethics Standards Board for Accountants (IESBA). The IESBA is an independent standard-setting body working under the auspices of the International Federation of Accountants (IFAC).

     

    IRBA has drawn up requirements for auditors in South Africa in addition to those housed in the Code of Ethics for Professional Accountants and has published the code and additional requirements as the IRBA Code of Professional Conduct for Registered Auditors.

     

    All registered auditors in South Africa must be registered members of the South African Institute of Chartered Accountants (SAICA). Members of SAICA are subject to the ethical requirements codified in the SAICA Code of Professional Conduct. This code conforms to the Code of Ethics for Professional Accountants as set by the International Ethics Standards Board for Accountants (IESBA).

     

     

    Audit Regulation

    External Monitoring

    The Independent Regulatory Board for Auditors (IRBA) conducts regular quality inspections at both a firm and audit partner level.

     

    Internal Monitoring

    All audit partners are subject to regular internal quality control reviews. In addition all audits which satisfy the criteria as set by our quality control committee will be subject to an independent quality control review before the audit report may be signed.

     


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