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"Reporting on a set of financial statements with reasonable assurance"


    According to South African law only persons registered with the Independent Regulatory Board for Auditors (IRBA) may issue an external audit report on financial information.

    The form, content and procedures associated with an external audit, as well as the rights, duties, responsibilities, and liabilities of the external auditor, are detailed in the Auditing Professions Act, 26 of 2005 and detailed in auditing standards.

    Various other laws and regulations impact on the work performed by the external auditors, for example:

    An audit is the examination of the financial report of an organisation - as presented in the annual report - by someone independent of that organisation. The financial report includes a balance sheet, an income statement, a statement of changes in equity, a cash flow statement, and notes comprising a summary of significant accounting policies and other explanatory notes.

    The purpose of an audit is to form a view on whether the information presented in the financial report, taken as a whole, reflects the financial position of the organisation as determined by a relevant financial reporting standard, such as IFRS.

    When examining the financial report, auditors must follow auditing standards which are set by a government body. Once auditors have completed their work, they write an audit report, explaining what they have done and giving an opinion drawn from their work.

    The entities that require external audit engagements

    The Companies Act, 2008 and regulations determine the audit requirement for certain types and size of companies. Most companies are exempt from the audit and only a small category of companies are mandated for an audit. All companies that are not required to have audited financial statements must have their financial statements independently reviewed (with the exception of companies where all the shareholders are also directors and therefore are not required to obtain an audit or a review):

    Companies that must be audited

    • Type of company criteria:
      1. public companies (e.g. listed and/or trading shares)
      2. state owned companies.
    • Activity and size criteria
      1. Assets in a fiduciary capacity (Activity): 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 R5 million;
      2. Method of incorporation (Activity): Any non-profit company, if it was incorporated: by the state, an international entity, a foreign state entity or a company; or primarily to perform a statutory function, or to carry out a public function at the direction of the state, an international entity, or a foreign state entity;
      3. Public Interest Score (Size): Any other company whose public interest score in that financial year is:
        • 350 or more; or
        • at least 100, but less than 350, if its annual financial statements for that year were internally compiled. Financial statements will be internally compiled, unless it was “independently compiled and reported”. In terms of the Regulations “independently compiled and reported” means that the annual financial statements are prepared:
          • by an independent accounting professional,
          • on the basis of financial records provided by the company, and
          • in accordance with any relevant financial reporting standards.

    PS: For those companies with a score below 350, an audit will nonetheless be required if the company meets the requirements of the activity test. For those companies with a score above 750 the independent review option does not apply.

    Opportunities for business accountants

    Business accountants may not perform an external audit of financial statements but they can assist a client, that is subject to an audit, to prepare for the audit. This can take the form of:

    • preparing an audit file and ensuring all relevant supporting documentation is on hand, or
    • assisting the entity with establishing systems and procedures that will ensure financial information is reliable and complete.

    These services will reduce the time auditors spend on performing the audit and save your clients lots of audit fees, whilst allocating some of the fees to your firm for helping prepare the client for the audit. This is especially beneficial since the advent of section 90 of the Companies Act, 2008 that restricts auditors from performing audit and non-audit work for clients.

    What SAIBA needs to do

    SAIBA is a legislative controlling body for accountants, accounting officers and independent reviewers. As a controlling body we are required to monitor and sanction compliance to standards of member conduct. We perform this function by ensuring compliance by our members to the IAASB’s engagement standards. We perform this function by requiring members to stay up to date with the latest developments in this area. We offer CPD and training courses to help guide members with their everyday challenge in the workplace. We lobby government and SME associations to allocate work to business accountants.

    What you need to do

    Only those SAIBA members that are also registered with the IRBA may perform external financial audits. It is an statutory offence to present oneself as a registered auditor or offer the services of an external auditor if you are not registered with the IRBA. However you can assist companies that require audits to prepare for the audit. This will increase the likelihood of the company obtaining a clean audit, and reduce the audit fees.

    Members are required to register with www.saiba.academy and read www.accountingweekly.com to stay updated and do a specialist license to unlock additional advisory work e.g. prepare for an external audit.

    In summary you can:

    1. Do a google search to identify the types of companies that are likely to need this particular service e.g. prepare for an external audit.
    2. Write an email or letter to them and explain how you can help them.
    3. Do the SAIBA CPD and relevant license related to the particular service.
    4. Perform the service for your new client.
    5. Alternatively contact a SAIBA Strategic Alliance partner.

    Additional resources

    SAIBA has provided a number of guides, videos and PowerPoint slides that will assist accountants with understanding their responsibilities in terms the various types of engagements: