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Cape Town - The Companies Act will require greater accountability from those in the accounting profession, according to the South African Institute of Professional Accountants (SAIPA).
However, the institute said on Thursday that the new law also spells good news for companies who are no longer required to conduct audits. Only public companies will be required to do so in future.
For organisations that are required to conduct an independent review instead of an audit, the Act requires that independent reviewers be registered members of a professional accounting body, such as SAIPA, which is also required to be a member of the International Federation of Accountants.
"With audits no longer required for private companies, many organisations' financial statements will instead be independently reviewed by professional accountants," said Shahied Daniels, SAIPA chief executive.
"However, in order for the independent review to carry any weight, it's vital that these professionals submit to a body, such as SAIPA, thereby increasing the assurance and reliance provided by the review of the company's financial health."
For the first time ever, someone engaged to prepare financial statements may be held criminally liable if they are found not to have carried out their duties correctly.
The act, which is expected to come into effect around August 2010, requires that the financial statements include a notice on the first page indicating the name and professional designation of the individual who prepared or supervised the preparation of financial statements; a move that's likely to cut out many of the so-called 'cowboys dabbling in the accounting profession,' according to Daniels.
- I-Net Bridge
