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    INDEPENDENT REVIEWS

INDEPENDENT REVIEWS

The Companies Act 71 of 2008 stipulates that certain entities are required to have Independent Reviews of their financials in accordance with ISRE 2400.

An Independent Review is an alternative assurance engagement where the independent reviewer provides limited assurance on a set of financial statements when compared to that of the reasonable assurance provided by the external auditor.

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The Companies Act 71 of 2008 stipulates that certain entities are required to have Independent Reviews of their financials in accordance with ISRE 2400.

An Independent Review is an alternative assurance engagement where the independent reviewer provides limited assurance on a set of financial statements when compared to that of the reasonable assurance provided by the external auditor.

The Independent Review differs from an audit as it is focused on the potential of material misstatements whereas an audit focuses more on the internal control environment.

An independent review is only required for companies that may be classified as non-owner managed and non-public interest. Owners of companies can opt for a voluntary Independent Review to be conducted on an annual basis.

Trusts can also stipulate in their trust deeds that the trust is to undergo an annual Independent Review in which case these entities also have to undergo Independent Reviews.

The Independent Review can only be performed by a person who is a member of a recognised professional body and who is qualified as an accounting officer.

The person who performed the compilation of the Annual Financial Statements can not be the same person as the Independent Reviewer.

BFS Tax and Accounting only performs Independent Reviews on entities with a public interest score of 100 or less.

To calculate your public interest score you would add together the results from the following calculations:

  • a number of points equal to the number of employees of the company during the financial year
  • one point for every R1 million (or portion thereof) in third party liability of the company at the end of the financial year
  • One point for every R1 million (or portion thereof) in turnover during the financial year as well as other income.
  • One point for every individual who is related to the entity

This will depend on the size and complexity of the entity that has to be reviewed.