After understanding which legalities you and your business need to comply with in order to stay business compliant, you might be asking yourself, ‘But what about an independent review?’. This is a very good thing to ask, and in this article we have put together a guide to understanding the independent review criteria.
What is an independent review?
As of the Companies Act, No. 7 of 2008, an independent review is when a company’s financial statements are reviewed independently and annually. The review will go through records and statements corroborated with third party confirmations to ensure that all the information submitted is correct.
How do I know if my company needs an independent business review?
The independent review requirements are based on a number of factors, the first being a Public Interest (PI) Score. This score is calculated on the following basis:
· Number of employees – 1 point
· Number of shareholders – 1 point
· Third party liabilities – 1 point per million
· Revenue – 1 point per million
The second factor for an independent review is whether or not your business is owner-managed versus run by a trust. If your company is owner-managed, you are less likely to need an independent review than if your company is not owner-managed, i.e. set up in a trust or managed by a shell company.
The PI score and management structure work hand-in-hand and follow this outline:
· PI less than 100 and owner-managed: no independent review necessary
· PI less than 100 and not owner-managed: independent review necessary
· PI score between 100-350 and owner-managed: no independent review necessary
· PI score between 100-350 and not owner-managed: independent review necessary
· PI score above 350 and either owner-managed or not owner-managed: audit necessary
For further information regarding this table, please consult the CIPC website.
Need more help?
If you have any questions, need help understanding the ins and outs of ensuring you are complying with business finance legalities, contact us at email@example.com, via our website, or on social media.