OPINION: Independent Review of Financial Statements
An Independent Financial Review (IFR) is the review of an organisation’s financial records by independent accountancy professionals.
IFRs were introduced by a Companies Act which came into effect on 1 May 2011. They replaced the traditional way of auditing records.
The nature of your company will determine the need for an independent review. According to the act of 2011, small- to medium-sized businesses with public interest scores below 350 and not managed by the owner qualify to be reviewed independently. If you qualify for this, remember that reviewers should be registered members of the correct professional accounting body.
Also note that different institutions are qualified to review different levels of companies, based on their Public Interest Scores. SAICA (South African Institute of Chartered Accountants) and IRBA (Independent Regulatory Board for Auditors) members are, for example, currently the only reviewers that may review companies with a public interest score of between 100 and 350.
Independent reviews should be done annually within six months after year-end. A review has some cost benefits as the procedures and requirements are less complicated and expensive than that of an audit.
The audit does however come at another price: less assurance than in the audit report. The aspect of what level of assurance the company is willing to accept should always be considered by the directors.
It is unfortunate to say that there is currently some confusion as to which professionals are authorised to perform what functions. Financial losses have occurred due to statements being compiled by unaccredited parties. This resulted in their tender applications being seen as invalid or financing applications being denied.
It is therefore essential that management double check their service providers’ accreditations with the relevant institute as well as what requirements their companies should comply with, in terms of their public interest score and their current Memorandum of Articles.
Wallrich compiles IFRS statements for other audit firms and Lloyd Viljoen performs Independent Reviews as part of their list of comprehensive services; for more information contact Wallrich at: 011 789 1011, or visit their website: https://www.wallrich.co.za.
Content provided by Wallrich, a financial management and accounting firm based in Randburg.
