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CIPC: Preparation and approval of AFS
- 15 April 2024
- CIPC
- South African Accounting Academy
CIPC has as one of its objectives in terms of Section 186(1)(d), a responsibility to promote compliance with the Companies Act, 71 of 2008. Inherent to this responsibility is the “efficient, effective and widest possible enforcement of the Act” as stipulated in Section 186(1)(e) of the Act.
In terms of Section 30(1) of the Act, a company must prepare AFS each year within 6 months after the end of its financial year. Within the same six-month period:
- The AFS must be audited in the case of a public company, state-owned company or any profit or non-profit company, if the company meets the requirements of Regulation 28 of the Companies Regulations of 2011, or if the Memorandum of Incorporation (MOI) requires an audit.
- AFS that are required to be independently reviewed in terms of Regulation 29 of the Regulations must also be prepared within 6 months after a company’s financial year-end.
- Companies who are exempted in terms of Section 30(2A), from any requirement to have their AFS for that year audited or independently reviewed must also prepare AFS within 6 months after financial year-end, albeit, they are not obligated to submit the AFS to CIPC as required by Section 33 of the Act.
Companies are thus required to ensure that their AFS are prepared and approved within the prescribed 6 months period after their financial year-end. Failure to adhere to the above may lead to an investigation and enforcement, which may result in the imposition of administrative penalties, as prescribed in Section 171 of the Act and a negative compliance record.
Click here to download Notice 33 of 2024:
https://www.cipc.co.za/wp-content/uploads/2024/04/Section-301-Notice_-33.pdf
Relevance to Auditors, Independent Reviewers & Accountants:
- The Companies Act is yet another piece of legislation that your clients must comply with, and which you must assess compliance with. If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (NOn-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
- Where you perform these compliance tasks on behalf of your client, you need to ensure that you comply with all relevant notices/enforcements/practice notes/customer letters issued by CIPC as the regulator.
- It is imperative that you schedule your clients efficiently to enable completion of their audit/independent review within 6 months from their financial year-end.
Relevance to Your clients:
- An entity (company or close corporation) has a duty to comply with the Companies Act (specifically section 30), and all relevant notices/enforcements/practice notes/customer letters issued by CIPC as the regulator.
- It is the company/CC’s responsibility to ensure that their audited AFS are issued within 6 months from their financial year-end.