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Johannesburg - Non-public companies will be better off having their financial statements audited, rather than having an independent review, the SA Institute of Chartered Accountants (Saica) said on Wednesday.
In terms of the new Companies Act, non-public companies will have an option between an audit and an independent review of their financial statements, Saica said in a statement.
Reviews are seen as simpler and cheaper, so Saica predicts many companies will choose this option.
"As Saica, we agree with and applaud the government's initiative to encourage entrepreneurship, however, we feel it's inappropriate to see the function of auditing as a hurdle and we advise eligible companies to choose carefully and not be shortsighted," said Saica project director for assurance Ashley Vandiar.
A review is generally quicker but not necessarily cheaper or simpler.
The level of expertise a company needs from the reviewer could have an impact.
"... the minimum qualifications and experience expected of the person conducting the review has a direct impact on the cost of a review."
Vandiar said an "audit involves tests of controls and substantive procedures, which results in a reasonable level of assurance whereas an independent review involves only enquiry and analytical procedures".
This means reviews result in only "limited, so-called negative assurance being expressed".
Vandiar said the benefits of an audit far outweigh the costs.
In terms of the new Companies Act, non-public companies will have an option between an audit and an independent review of their financial statements, Saica said in a statement.
Reviews are seen as simpler and cheaper, so Saica predicts many companies will choose this option.
"As Saica, we agree with and applaud the government's initiative to encourage entrepreneurship, however, we feel it's inappropriate to see the function of auditing as a hurdle and we advise eligible companies to choose carefully and not be shortsighted," said Saica project director for assurance Ashley Vandiar.
A review is generally quicker but not necessarily cheaper or simpler.
The level of expertise a company needs from the reviewer could have an impact.
"... the minimum qualifications and experience expected of the person conducting the review has a direct impact on the cost of a review."
Vandiar said an "audit involves tests of controls and substantive procedures, which results in a reasonable level of assurance whereas an independent review involves only enquiry and analytical procedures".
This means reviews result in only "limited, so-called negative assurance being expressed".
Vandiar said the benefits of an audit far outweigh the costs.
