Public Interest Score, Audit Committe & Non Exec Directors

[SSS100]

Good day,

I have a small business, and not really clued up about the new companies Act (i so far out all efforts in running the business than Acts)

So, my accountant (out-sourced service) just informed me that they will be doing a Public Interest Score on the company and I may have to appoint Audit Committe & Non Exec Directors in the company.

I do not understand this. The accountat told me a long story about "points for employees & liabilities"
Honestly, I do not get the story on the matter. And I do not want to bring in strangers into my business so they can dictate to me what to do (I worked very hard to develop the business)

Please help and clarify this new beast

Regards

[geraldenek]

Hello it is really difficult to comment as we do not have the necessary info on your business. the appointment of an audit committe of a small company is very strange. audit committee only apply to public companies, state-owned companies and companies which elect to discharge them voluntarily.

please go to this link in order to get your score and determine for yourself if you have to be audited or independant review and also to this link to read a bit more

[BusFact]

I have a small business, and not really clued up about the new companies Act (i so far out all efforts in running the business than Acts)

So, my accountant (out-sourced service) just informed me that they will be doing a Public Interest Score on the company and I may have to appoint Audit Committe & Non Exec Directors in the company.

I do not understand this. The accountat told me a long story about "points for employees & liabilities"

I think that he is just going through the motions. To be forced into an audit, you need to have many staff plus huge turnover plus outside investors plus ... Basically most small businesses will not have to go through an audit. Your accountant will calculate PI score, probably find its nice and low and then only do something like a review.

I have never heard of small businesses having to appoint audit committees or non exec dircetors. If he does end up telling you this is so, then post details here and we can all start panicking or help you fight it. Until then I would not worry.

[SSS100]

There is only 3 staff members, including myself (director & shareholder) plus a black female (also made director, must get bee points on ratings) and another gent
No outside investors

I will ask the accounting firm to calcultate the PI score and maybe that can give an idea where I stand.

[SSS100]

The link helped, I just did the calcs myself, I get a scorecard of 3012 and audit required.
That i do not mind, the company has always been audited since 2008 financial year end (28 Feb 2008)

Now, do I need the audit committe the accountant is talking about, bearing in mind that sole shareholder is also director?

[geraldenek]

Now, do I need the audit committe the accountant is talking about, bearing in mind that sole shareholder is also director?

Please read here with regards to the audit committee pages 4 and 5.

3012 - guess it should be without one digit - if not, this is not a small business as per your original post and maybe we all can come and work for you?

[SSS100]

The score is correct, problem is as follows:
1. I deal in foreign currency US Dollars and these get convereted into ZAR
2. I only get commision/ brokering income for the deals, however the full invoice amounts gets passed on my books therefore inflating my revenue

and the accountants insist it's the right way instead of just recording the brokering income I get

[BusFact]

Wow, that is a monster score you have come up with and it does seem your life is about to become complicated. I think you fall into the category of unintended consequences of this new act.

To me it seems strange that your turnover includes the deal value (unless these deals are going through your bank account), but then I don't understand your business model nor am I an accountant, so its probably better to take your accountant's view and not mine

[SSS100]

Yes, the deals go through my bank account. Here is the case:

The SA company wants to deal with SA compay so they can improve on their BEEEE score card (remember that I have a black lady director, so score card good)
Then, the full deal amount ends up going via my bank but pay the international supplier immediately as I get the money.

Then I'm left with the commission only, and its way yoo little

[Dave A]

This isn't fronting?

[SSS100]

No, not at all Dave. I own the entity and there is no "hidden" shareownership or partnerships.
Therefore no fronting, fronting is when someone else is the "end" owner other than the person pushed in front