Independent Review Services
At IMCA, we will guide you through the Independent Review process and any other steps that may be recommended or necessary, as well as on the specific requirements of the Companies Act.
Independent Reviews are engagements with limited assurance, not full assurance. The majority of the operations carried out in this engagement will be research and analytical steps leading to a conclusion. Companies that need independent evaluations most frequently fall just short of the audit criteria. However, among other situations, the following may necessitate an independent review:
- A business with at least a 100 Public Interest Score whose financial statements are not prepared independently
- If the majority of the beneficial owners of a corporation with a Public Interest Score of less than 100 are not directors
A variety of stakeholders may demand a company undergo an audit or request an independent review for reasons beyond those mentioned above.
Independent Review Benefits
- Provide Limited Assurance
- Compilation of Annual Financial Statements
- Aimed at Small to Medium Enterprises
- Significantly less expensive than Traditional Audit
- Prepared with Appropriate Accounting Framework
Is it a Legal Requirement?
According to the new Enterprises Act, private companies in South Africa will be able to choose an independent review instead of an annual audit, and small businesses will be able to choose the less time-consuming and expensive alternative of having their financial statements independently examined. Only Public Companies are required to undergo an audit under the New Companies Act. The goal of the new legislation is to make small- and medium-sized business regulation simpler, less expensive, and more accessible for business in South Africa.
According to the Companies Act 71 of 2008, certain organizations must undergo independent reviews of their financials that follow ISRE 2400.
In contrast to the reasonable assurance offered by the external auditor, an independent reviewer offers limited assurance on a set of financial statements. This is known as an alternative assurance engagement.
The Independent Review is distinct from an audit in that it is concentrated on the possibility of major misstatements, as opposed to an audit, which is primarily concerned with the internal control environment.
Only businesses that could be categorized as non-owner operated and non-public interest need to undergo an independent examination. The annual Independent Review is a voluntary process that business owners can choose to participate in.
These entities must also undergo Independent Reviews if a trust makes it clear in its trust deed that it will conduct an annual Independent Review.
Only someone who is a member of a recognized professional organization and who is certified as an accounting officer may conduct the Independent Review.
The Independent Reviewer and the person who completed the production of the Annual Financial Statements cannot be the same individual.
In order to protect the public interest, IMCA Professional Accountants SA exclusively conducts Independent Reviews of organizations scoring 100 or lower.
What are an Independent Review’s Procedures?
Significant differences between a review engagement and an audit exist, including reporting. A review engagement involves fewer processes of a different nature, scope, and kind than an audit. A review engagement will also result in less assurance being obtained.
All of the evidence needed for an audit, including the compilation of annual financial statements, is provided by the procedures carried out during a review. The primary goals of the review engagement processes are to gather adequate and suitable data to support a limited decision about whether the financial statements are prepared in compliance.