7.pdf This presentation captures many uses and the significance of the number...
Supporting SME Growth Through Innovation: SA Companies Act
1. IFAC SMP FORUM
Supporting SME Growth Through
Innovation: SA Companies Act
Bernard Peter Agulhas
Kampala, Uganda
5 June 2013
2. Innovation ‘in action’
• Financial Reporting Frameworks
– IFRS for SMEs
• Risk-Based Approach to Inspections
– Indirect impact on SMEs
– Changed Basis for Inspections Fees
– ISQC1 Inspections
• Companies Act, 2008
– Direct impact on SMEs
– Impact of Section 90(2)?
3. Companies Act and Regulations
• Effective from 1 May 2011
• Ultimate goal in repealing the previous Act was to
ensure that the regulatory framework for all types
and sizes of enterprises promotes growth,
employment, innovation, stability, good governance,
and confidence
• Different types of companies must comply with
different rules as set out in the Act
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4. The Independent Review
For all financial year ends after 30 April 2011,
independent reviews are required by all companies
which:
• Are not required in terms of the Act to be audited;
and
• Do not choose to be voluntarily audited; and
• Do not meet the exemption criteria set out in the Act
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5. Public Interest Score
Is calculated by all companies at financial year end as:
• One point per employee for the average number of
employees during the financial year
• One point for every R1 million or portion thereof in
third party liabilities at financial year end
• One point for every R1 million or portion thereof in
turnover during the financial year
• One point for every individual who at financial year
end has a beneficial interest in issued securities of a
profit company or is a member of a non-profit
company
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6. Who can perform audit/independent
review
Category Qualification Impact on SME
Audit • Registered Auditors
Independent Review of
Companies with a public
interest score of 100-
349
• Registered Auditors
• Members of IRBA
accredited
professional body
• Increased access
• Increased competition
• Decreased costs
Independent Review of
Companies with a public
interest score of less
than 100
• Registered Auditors
• Members of IRBA
accredited
professional body
• Accounting officers
• Increased access
• Increased competition
• Decreased costs
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7. Regulation of Independent Reviews
Category Regulator
Audit IRBA
Independent Review of Companies
with a public interest score of 100-349
? (but must be less stringent)
Independent Review of Companies
with a public interest score of less than
100
CIPC? (but must be less stringent)
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8. Other Services – Section 90(2)
Accounting, Bookkeeping and Secretarial Services:
• An auditor and the audit firm may not be currently
involved, nor in the five years preceding
appointment, in the maintenance of a company’s
financial records or the preparation of its financial
statements or in performing
accountant/bookkeeper/related secretarial duties
• Impact on SMP – Impact Analysis performed
• Impact on SME – Impact Analysis performed
• Extension of monitoring of compliance
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9. Rotation
• The same individual may not serve as auditor of a
company for more than five consecutive years,
commencing 1 May 2011
• No rotation requirements for independent reviewers
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10. Increasing Thresholds
• Already discussed with Companies and
Intellectual Properties Commission
• Could be solution to Section 90 (2)
• Inflationary adjustments for PI Score elements to
be considered
11. Value of Other Assurance Engagements
• Lower cost to client?
• Procedures followed by auditor in expressing
negative assurance are less?
• Increased access to profession?
• More efficient for client?
• Early days
12. Other Influences
• Requirements of the Revenue Service and
Banks
• Expectations
– Parliament: IRBA is the Custodian of the Profession
– EU Green Paper
– Responsibility for high quality assurance services
– Response by IRBA
• SMP Support
• Promotion of Protection of the Public