Every year, companies must report on their financial activities in a set of statements governed by the International Financial Reporting Standard (“IFRS”). These annual financial statements (“AFS”) must be finalised within six months of the financial year-end. They consist of the set of statements including:
  • Income statement ( P and L, Statement of financial position)
  • Statement of changes in equity
  • Statement of financial performance (Balance Sheet)
  • Statement of cash flows
  • Notes, policies & other explanatory notes
  • Comparative information


Each set of published financials will require a resolution from the board to approve the statements and appoint an authorised director to sign them off.
Depending on the size of the company and its activities, these statements will either need to be:

Compiled (internally)
Independently reviewed (external) or
Audited
Compiled

A compilation is a set of annual financial statements that are prepared internally. An in-house accountant or service provider would draft them and they will not undergo any external reviews after they are published.
Compilations would apply to all owner-managed companies with a public interest score (“PIS”) of below 100.

Independently Reviewed

Independent reviews are required when the company has a PIS below 350 and it is not owner-managed (in other words, the shareholders of the company are not the directors). The annual financial statements will be drafted by the accountant and then reviewed externally by either a registered accountant or auditor depending on the PIS.

Audited

If the company is any of the below, it will require an audit:

State-Owned Enterprise (“SOE”),
Public Company (registered on the JSE or other stock markets)
Non-Profit Organisation (“NPO”) that is incorporated by the state/for regulatory purposes
Other mandatory reasons are as follows:

The MOI requires an audit
The company holds >R5m assets in a fiduciary capacity (assets on behalf of non-related persons)
If the company is owner-managed, AFS are compiled & the PIS is over 100
Any company with a PIS of over 350

According to CIPC, all companies that are independently reviewed or audited will need to undergo an additional layer of review according to The Companies Act by completing the CIPC compliance checklist.
This must be submitted every year with respect to the previous calendar year when the annual returns are filed (at the anniversary of the incorporation of the company). Here is a free tool for you to find out if you comply.

All audited AFS will also need to be submitted to CIPC in iXBRL format in order to satisfy a final layer of scrutiny.