Every South African company prepares annual financial statements. Whether someone has to check them, and how closely, depends mostly on one number: the company's public interest score. This guide shows how to work it out and what each result means.
noteThis is a general guide to the Companies Act and its regulations, not advice for your company. Confirm your position with your accountant or auditor, and check your Memorandum of Incorporation, which can ask for more than the law does.
Work out your public interest score
The score is calculated for each financial year. Add up four things:
| For every | Points |
|---|---|
| Employee, on average over the year | 1 |
| R1 million (or part of it) owed to third parties at year end | 1 |
| R1 million (or part of it) of turnover in the year | 1 |
| Person with a beneficial interest in the company's shares | 1 |
For a non-profit company, the last line counts members instead of shareholders.
An example
A consulting company with 12 employees, R8.4 million turnover, R1.3 million owed to suppliers and the bank at year end, and two shareholders:
| Points | |
|---|---|
| Employees | 12 |
| Turnover (R8.4m, so 9) | 9 |
| Third-party liabilities (R1.3m, so 2) | 2 |
| Shareholders | 2 |
| Public interest score | 25 |
What the score means
| Public interest score | What the statements need |
|---|---|
| 350 or more | An audit |
| 100 to 349, statements compiled internally | An audit |
| 100 to 349, statements compiled independently | An independent review by a registered auditor or chartered accountant |
| Under 100 | An independent review, which an accounting officer can do |
Some companies are audited whatever their score: public and state-owned companies, and companies that hold more than R5 million in assets for people outside the company in a fiduciary capacity.
The owner-managed exemption
If every shareholder is also a director, a company that doesn't need an audit doesn't need an independent review either. The example company above, run by its two shareholder-directors, would need neither, though its statements still have to be prepared.
Where Looped fits
Looped Financials compiles your annual financial statements from your books, or from an uploaded trial balance, with notes and comparatives. When you compile a South African pack, the cover asks which assurance applies: audited, independently reviewed or compiled. Your score tells you which to choose, and the pack goes to your auditor or reviewer from there.
If you're not sure where your company lands, your accountant or auditor can work out the score with you. Whichever assurance you need, you can start with Looped Financials and compile the statements from your own books.