All private company's (Pty) will be required to prepare financial statements. Even if the Pty is a small business.
The Regulations to the Act specify a formula for the public interest score. Whether the financial statements of a Pty will have to be audited is dependent on the size of the Pty and the way the financial statement is prepared.
If a Pty scores between 100- 350 on the public interest score the Pty will have to audit its financial statements by a registered auditor. There is however the choice for a small business to have its financial statement audited even if it has a score below 100 points.
The public interest score is determined by the following factors:
Type of company (Pty, state-owned, public listed/ non-listed and non-profit)
Financial year end date
How was the financial statement complied (internally or externally)
Public score interest factors
Average number of employees during the financial year
Total third party liability of company at end of Financial year
Total turnover during financial year
Total number of members with direct or indirect beneficial interest in company
Engagement type factors
Is the company required to be audited according to memorandum of incorporation
Did the company hold assets greater than 5 million for unrelated party at any time of the year
Are the shareholders also directors
A small business, Pty generally do not qualify to be audited.