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Independent Review – Creating jobs and reducing costs

In the wake of the enactment of the Companies Act 2008 and the recently issued draft regulations, the issuing of reports on financial statements has taken on a whole new meaning.

The Act and the proposed regulations introduce a new report to be issued on financial statements of companies by "independent accounting professionals". This report is known as an Independent Review and is an alternative report to the traditional audit issued by a registered auditor and will most likely replace accounting officer reports issued in terms of the close corporation and other statutes.

An independent accounting professional need not necessarily be a registered auditor but has to be a member of a professional body that is a member of the International Federation of Accountants (IFAC). The independent review is also aligned to standards of reporting issued by IFAC.

It is expected that more than 700 000 companies and close corporations will receive the benefits of these changes. Companies will be able to opt for a less onerous and less costly form of assurance. Close Corporations will be ensured of a standardised reporting regime not previously part of the Close Corporations Act. Combining the option of the independent review with audit exemption also provided for in the act – then companies and close corporations may stand to save as much as R1 billion annually.  

Furthermore the quality of the independent review is ensured by standardising the competence levels of independent accounting professionals. In terms of the draft regulations all those that issue the alternative assurance report should be affiliated with the International Federation of Accountants (IFAC) and will have to follow the same standardised and internationally aligned procedures when issuing reports. This last point will be of particular benefit to close corporations as the procedures followed by accounting officers have always been open to abuse.

It is therefore important that consumers are made aware of the standards of performance that they should expect from report providers such as auditors, accounting officers and the recently introduced "independent accounting professionals".

Likewise those that will issue independent review reports should ensure adherence to the required standards.

Comments may be made to the draft Companies Regulations 2010 until 1 March 2010.

Issued by
Nicolaas van Wyk
Director: Centre for Independent Review
www.sacir.org
and also the Technical and Support Executive of the ACCA (South Africa)
www.accasa.co.za

About the South African Centre for Independent Review

Our aim is to:

• make consumers aware of their rights, and
• assist independent accounting professionals to become aware of their obligations

The South African Centre for Independent Review (SACIR) was formed in 2009 as an independent public interest organisation committed to accountability, quality standards, and education in the performance of assurance and related reporting services so as to reduce the expectation gap between users of financial statements and those that provide assurance and related reports on financial statements.

The expectation gap is the gap between what users expect a standard of performance should be and the actual standard of performance adhered to by a report provider such as an auditor or accounting officer.

To paraphrase the Consumer Protection Act, 2008 we hope that our efforts will ensure companies and their stakeholders are provided with fair, accessible and sustainable reporting engagements. Our efforts will be focused on consumer information and collaboration with professional bodies so as to prevent unfair marketing and business practices.  

Our initial focus is on the following reporting services;

• Independent Review as detailed in section 30 of the Companies Act, 2008
• Accounting Officer reports as required by section 64 of the Close Corporations Act, 1984.

About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

We support our 131,500 members and 362,000 students throughout their careers, providing services through a network of 82 offices and active centres. Our global infrastructure means that exams and support are delivered - and reputation and influence developed - at a local level, directly benefiting stakeholders wherever they are based, or plan to move to, in pursuit of new career opportunities. Our focus is on professional values, ethics, and governance, and we deliver value-added services through 57 global accountancy partnerships, working closely with multinational and small entities to promote global standards and support.

We use our expertise and experience to work with governments, donor agencies and professional bodies such as the International Federation of Accountants (IFAC) to develop the global accountancy profession and to advance the public interest.

Our reputation is grounded in over 100 years of providing world-class accounting and finance qualifications. We champion opportunity, innovation, diversity, integrity and accountability. By promoting our global standards, and supporting our members wherever they work, we aim to meet the current and future needs of international business.

ACCA understands the real issues facing small businesses as 63,000 of our members work in SMEs or small partnerships worldwide. ACCA's theme for 2009-2010 is Accountants for Business. This theme emphasises the important roles accountants play in both the private and public sectors, promoting their role as advocates of sound business practices, champions of sustainable business development and identifiers of value drivers which lead to high-performing organisations.

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