CAN SAICA MEMBERS REGISTER A PRIVATE COMPANY TO PERFORM COMPILATIONS OF FINANCIAL STATEMENTS

CAN SAICA MEMBERS REGISTER A PRIVATE COMPANY TO PERFORM COMPILATIONS OF FINANCIAL STATEMENTS

A company’s financial statements may be compiled internally or independently. Financial statements will be considered to be compiled internally unless they have been independently compiled and reported (Companies Regulations, regulation 26 – 27). The definition of independently compiled and reported requires: 

  • That the annual financial statements are prepared by an independent accounting professional;
  • On the basis of financial records provided by the company; and
  • Compiled in accordance with any relevant financial reporting standards. 

The requirements therefore refer back to the definition of an independent accounting professional, which is defined as: 

  • A registered auditor in terms of the APA;
  • A member in good standing of a professional body that has been accredited in terms of section 33 of the APA (CA(SA)); or
  • Qualified to be appointed as an accounting officer of a close corporation in terms of Section 60(1), (2) and (4) of the Close Corporations Act, 1984 and
  • Does not have a personal financial interest in the company or a related or inter-related company; and
  • Is not-
    • Involved in the day to day management of the company’s business, not has been so involved at any time during the previous three financial years; or
    • A prescribed officer, or full-time executive employee, of the company or another related or inter-related company, or have been such an officer or employee at any time during the previous three financial years; and
  • Is not related to any person who falls within any of the criteria set out in the previous two bullet points. 

Therefore a CA(SA) or AGA(SA) who meets the stated independence requirements may be engaged to independently compile the financial statements of a company. However, a CA(SA) who is also a registered auditor (RA) with the Independent Regulatory Board of Auditors (IRBA) and who intends to provide any professional services in his/her capacity as a RA in the form of a ‘firm’, must remember that the only firms that may become registered auditors are sole proprietors or partnerships or personal liability companies (refer to section 38 of the APA).

SAICA members are requested to consider the above when setting up a new private company or other type of entity to ensure that they meet the requirements of relevant legislation with respect to providing certain types of professional services, including the capacity in which they will be providing those services. 

Reference: 

Small and Medium Practice Newsletter – 1st Quarter 2016