Auditor sign off on Income Statement and Balance Sheet

[TanyaK]

I own a CC - does an auditor have to sign off my Income and Balance Statements ?

When I registered my CC through Fact Business Corporation an "accounting officer" was listed on the CC papers - do I now have to use this firm for my accounting needs?

[Dave A]

You don't need an auditor to sign off on the financials of a cc. However, it is always a good idea to at least get an accountant to run over the financials before you present them anywhere.

The members should sign off (take responsibility for the accuracy of) the financials. Technically the role of the accounting officer is to ensure that the financials and various returns are completed and submitted. Practically, the accounting officer is a point of contact.

BTW any member of the cc can be the accounting officer. It doesn't have to be an accountant. It's not a skill - it's a responsibility

[Dave A]

BTW any member of the cc can be the accounting officer. It doesn't have to be an accountant. It's not a skill - it's a responsibility

Oops! Sudden thought.

I might be thinking of the public officer. I'm rusty on cc's - haven't had one for ages and back then we didn't have to have an accounting officer. Does a cc really need one now?

Either way, it's the members that must sign off. Even in a Pty Ltd the auditor skillfully dodges any potential flack and it's the directors in the firing line.

And you can change those office bearers by notice to CIPRO at any time. So don't feel locked in.

[Marq]

It doesn't have to be an accountant. It's not a skill - it's a responsibility

Whoooa.....I suddenly saw myself on the street corner with a cardboard sign saying....ex accountant - not skilled and no longer needed but very responsible.

OK - you need a QUALIFIED SKILLED person called an Accounting Officer.

The Close Corporations act says

Section 60.
Qualifications of accounting officers
(1)
No person shall be appointed as or hold the office of an accounting
officer of a corporation, unless he is a member of a recognized
profession which
(a) as a condition for membership, requires its members to have
passed examinations in accounting and related fields of study
which in the opinion of the Minister would qualify such
members to......

4)
(a) A corporation may appoint as its accounting officer -
(i) any person who is a member of a recognised profession
listed in a notice referred to in subsection (2);
(ii) a firm as defined in section 1 of the Public Accountants’
and Auditors’ Act, 1991 (Act No. 80 of 1991);
(iii) any other firm, if each partner in the firm is qualified to be
so appointed; or
(iv) any other corporation, if each member of such
corporation is qualified to be so appointed.

Then section 62 - sets out the duties of the accounting officer which includes setting members, managers and people in charge straight on who is really in charge and reminding them of their duties to know important parts of acts especially the parts of who's actually in charge......

Does a cc really need one now?

mmmmmm.......Dave

[TanyaK]

Thank you!

[Dave A]

Not trying to put you out of a job there, Marq. At least not intentionally
Yep - I was thinking about the public officer and the rust on cc's is definitely showing. Can I plead Friday the 13th for failing to pay proper attention.

So can you clear up TanyaK's question?

And what are the statutory obligations of the accounting officer?

[ChrisB]

do I now have to use this firm for my accounting needs?

You can change the accounting officer and use anybody you prefer. There is no need to use the firm that appears on the CK1.

[Marq]

So to answer the questions - first off the Financial Statements need to be signed off by a Qualified Accounting Officer.

You appoint the first AO through the initial registration and they/he/she gives their consent to be the corporations AO.
Thereafter you can change the AO at any stage and a relevant CK2A is filled in which reflects the change at the Registrars office. Note that all the members must sign off on this. Usually the New Accountant will arrange this as until the registrar records the change the old accountant is still responsible.

Nothing is 'legal' until the registrar has recorded the changes.
A note for those who believe a shelf company is the way to go as it is quicker than going through the hoops with registering a new corporation. When you buy the shelf company, you fill in the ck2's and lodge them. There is a delay factor which we are all aware of at the registrars office. It will take the same amount of time for them to process a CK1 as it will a CK2 & CK2A .........the note is...be aware that that during the period that the registrar has your changing documentation CK2/CK2A in the pipeline and has not recorded the change, someone/body/people...who you do not know...both AO and members are in charge of your company. So there you are just bought a new business, deposited some money into an account in the name of the business, maybe transferred a R10mill property.....and guess what - you have in effect given it to an unknown person to 'look after' it for a short while. The new name that you wanted has disappeared along with some of your newly invested assets...How do we know this is a problem.........mmmmmm....go figure.

Make sure your AO is registered and a member with SAIPA or SAICA - the main institutes which govern the qualification of accountants and auditors - there are a few other institutes as well but usually these two main bodies are the main guys with SAIPA being the one you should target.

The AO duties includes - making sure the books have been drawn up correctly in terms of gaap and that the financials reflect the books.

Thats the main duty and then they have to report if there are any irregularities reckless trading etc. Remember that if there are any irregularities then the company / member liability coverage scenario falls away. This includes technical insolvent situations.

The members are responsible for seeing that the books are drawn up properly and they have the ultimate responsibility for the results. There are a few accountants currently sitting with members doing time, as they were all assumed to be in cahoots. That is why an accountant cannot just take a back seat when seeing something wrong. That reminds me of the chinese couple who named their handicapped child......Sum Ting Wong.

The other responsibility of the members is to pay the accountant huge bucks for services rendered - and not to whine about it.

The future of CC's is in the balance with the new companies bill having been passed now. The bill provides for an indefinite case but is open to interpretation. The thought is that as soon as the bill is enacted, you will not be able to register a new cc. Old cc's will have a 10 year period to convert to a new style company.

What is a Public Officer that Dave has been talking about?

Every CC needs to nominate a designated person to be responsible for receiving legal and tax documents on behalf of the business. A Member of the CC is normally appointed as the Public Officer or this can be any other person. This is normally your accounting officer or bookkeeper but you can appoint an unskilled unqualified other person to do this function. This is also the person that may sit doing time when the fines of the company vehicles have not been paid.....so choose someone you do not like. This is why the accountant normally gets to be appointed to this prestigious position.

So thats it for now - its quite simple really like most accountants. Who said that......

[Dave A]

Thanks Marq. Much appreciated.

And just to tidy up on my end with memory well and truly jogged.

...back then we didn't have to have an accounting officer.

Indeed we did have an accounting officer - it was just I tended to have the books drawn up to the point where the accounting officer just had to run over the numbers and check on a few compliance issues. Nothing like the audit I have to live with nowadays in a Pty Ltd

The other responsibility of the members is to pay the accountant huge bucks for services rendered - and not to whine about it.

That would be the accountant's perspective

But Marq makes an important point. Your accountant's time is valuable/expensive. Keeping your books and records in good order will save you bucks, not to mention help you manage your business better.

[TanyaK]

Thanks for the info everyone !