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Sprout Consulting

Sprout Consulting

Date: 2014-02-28
Many business owners see the audit fee as a grudge purchase. The good news is that if all of your shareholders (who must be natural persons) are directors, the new Companies Act may not require an audit. So unless your bankers or others do, you may be off the hook. At worst you may need to have your financial statements independently reviewed which is less in depth and less costly than an audit. 

The key to this decision revolves around something called a public interest score ("PI Score"), which must be calculated by every company at the end of each financial year. Another key element is whether your company prepares its financial statements internally or outsources this. So how does a company accumulate points?

(a) 1 point for each employee (the average number of employees during the financial year);
(b) 1 point for every R1 million (or portion thereof) in third party liability at financial year end;
(c) 1 point for every R1 million (or portion thereof) in turnover during the financial year; and
(d) 1 point for every individual who, at the end of the financial year, owns shares in the company.

Make sure you know what is applicable to you.