An in-depth review of audit and independent review requirements.
The end of your year-end rollover journey is in sight! We are ecstatic for your part and to keep you on this “walking on a cloud” streak we want to ensure that you are prepared for your post-rollover tasks and responsibilities. After your year-end rollover is complete, your last step of the process will be assessed through either an audit or an independent review. Not sure which one you are required to do? That is where we lend a helping hand with an easy guide on your audit and independent review requirements.
Let’s kick off with the independent review.
According to SAICA, an Independent Review is a limited assurance engagement where the practitioner performs primarily inquiry and analytical procedures to obtain sufficient appropriate evidence as the basis for a conclusion on the financial statements as a whole, expressed in accordance with the requirements of ISRE. Put plainly this review requires an outside reviewer, who has no interest in the company which is being reviewed, to assess all the company’s financial statements and books to form an objective review. This reviewer can be any person who is a member in good standing of a relevant recognized professional body and who is qualified as an accounting officer.
If your company is owned by a trust for instance, or when all your company shareholders are not also directors your company is required to do an independent review, because your company is not considered manager-owned. Manager-owned companies are not required to do an independent review.
In contrast, we will take a look at an audit.
An audit is an “independent examination of financial information of any entity, whether profit oriented or not, irrespective of its size or legal form when such an examination is conducted to express an opinion thereon. An audit can be conducted internally by employees of the organization or by an outside Certified Public Accountant (CPA) firm.
All public and state-owned companies have to be audited as well as any Private company that has public interest. Owner-managed companies and small private companies are not required to be audited but can do a voluntary audit if they feel the need to.
The purpose of both an independent review and an audit is to obtain appropriate evidence from which a conclusion will be formulated for a company’s financial statements as a whole. These forms of assessment must be done to ensure accuracy and dependability in a company’s financials as well as prevent any deliberate misstatements of facts. A positive outcome of an audit can also provide your investors with peace of mind regarding the safety of their investment.
Before you pack away those financial
yearend documents, keep them on standby for a bit longer, because an audit or an independent review might be on your horizon! Keep your “walking on a cloud” streak going for a bit longer and be prepared for the assessment of your company’s financial statements.