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Supporting SME Growth Through Innovation: SA Companies Act
 

Supporting SME Growth Through Innovation: SA Companies Act

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Presentation by Bernard Agulhas, IFAC SMP Forum June 2013

Presentation by Bernard Agulhas, IFAC SMP Forum June 2013

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    Supporting SME Growth Through Innovation: SA Companies Act     Supporting SME Growth Through Innovation: SA Companies Act Presentation Transcript

    • IFAC SMP FORUMSupporting SME Growth ThroughInnovation: SA Companies ActBernard Peter AgulhasKampala, Uganda5 June 2013
    • 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)?
    • Companies Act and Regulations• Effective from 1 May 2011• Ultimate goal in repealing the previous Act was toensure that the regulatory framework for all typesand sizes of enterprises promotes growth,employment, innovation, stability, good governance,and confidence• Different types of companies must comply withdifferent rules as set out in the Act3
    • The Independent ReviewFor all financial year ends after 30 April 2011,independent reviews are required by all companieswhich:• 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 Act4
    • Public Interest ScoreIs calculated by all companies at financial year end as:• One point per employee for the average number ofemployees during the financial year• One point for every R1 million or portion thereof inthird party liabilities at financial year end• One point for every R1 million or portion thereof inturnover during the financial year• One point for every individual who at financial yearend has a beneficial interest in issued securities of aprofit company or is a member of a non-profitcompany5
    • Who can perform audit/independentreviewCategory Qualification Impact on SMEAudit • Registered AuditorsIndependent Review ofCompanies with a publicinterest score of 100-349• Registered Auditors• Members of IRBAaccreditedprofessional body• Increased access• Increased competition• Decreased costsIndependent Review ofCompanies with a publicinterest score of lessthan 100• Registered Auditors• Members of IRBAaccreditedprofessional body• Accounting officers• Increased access• Increased competition• Decreased costs6
    • Regulation of Independent ReviewsCategory RegulatorAudit IRBAIndependent Review of Companieswith a public interest score of 100-349? (but must be less stringent)Independent Review of Companieswith a public interest score of less than100CIPC? (but must be less stringent)7
    • Other Services – Section 90(2)Accounting, Bookkeeping and Secretarial Services:• An auditor and the audit firm may not be currentlyinvolved, nor in the five years precedingappointment, in the maintenance of a company’sfinancial records or the preparation of its financialstatements or in performingaccountant/bookkeeper/related secretarial duties• Impact on SMP – Impact Analysis performed• Impact on SME – Impact Analysis performed• Extension of monitoring of compliance8
    • Rotation• The same individual may not serve as auditor of acompany for more than five consecutive years,commencing 1 May 2011• No rotation requirements for independent reviewers9
    • Increasing Thresholds• Already discussed with Companies andIntellectual Properties Commission• Could be solution to Section 90 (2)• Inflationary adjustments for PI Score elements tobe considered
    • Value of Other Assurance Engagements• Lower cost to client?• Procedures followed by auditor in expressingnegative assurance are less?• Increased access to profession?• More efficient for client?• Early days
    • Other Influences• Requirements of the Revenue Service andBanks• 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
    • Thank YouPhone: +27879408800Email: bagulhas@irba.co.za