DUTIES OF A PROFESSIONAL ACCOUNTANT (SA) AND ENGAGEMENT LETTERS Region/District Forums 2018

Transcription

1 DUTIES OF A PROFESSIONAL ACCOUNTANT (SA) AND ENGAGEMENT LETTERS Region/District Forums 2018

2 PROFESSIONAL ACCOUNTANT (SA)

3 CONTENTS 1. Member s guide- overview 2. SAIPA working papers 3. Duties in terms of the CC Act 4. Independent Accounting Professional 5. Independent reviewer 6. Broad Based Black Economic Empowerment 6. Business Rescue

4 RESOURCES AVAILABLE FROM SAIPA Member s guide Working paper file Independent review

5 CLOSE CORPORATIONS ATC 69 of 1984 Section 59 Appoint an AO on the date of registration. Vacancy must be filled within 6 Members appoint an Accounting officer months Section 58 Statement of Financial Prepare and present AFS Position Statement of comprehensive income Accounting Officers report ISRS 4400 agreed upon procedure Duty to report financial irregularities trading when insolvent

6 DUTIES OF THE ACCOUNTING OFFICER The accounting officer of a corporation shall, not later than six months after completion of the annual financial statements: Determine whether the annual financial statements are in agreement with the accounting records of the corporation; Review the appropriateness of the accounting policies presented to the accounting officer as having been applied in the preparation of the annual financial statements;

7 If during the performance of his duties an accounting officer becomes aware of any contravention of a provision of this Act Describe the nature of the contravention in his report. Non compliance with Laws and Regulations (NOCLAR)

8 ENGAGEMENT PROCESS

9 REPORT TO CIPC IF Has reason to believe, that the corporation is not carrying on business or is not in operation and has no intention of resuming operations in the foreseeable future; or

10 REPORT TO CIPC IF During the performance of his duties findsthat any change, in respect of any particulars mentioned in the relevant founding statement has not been registered; or That the annual financial statements indicate that as at the end of the financial year concerned the corporation's liabilities exceed its assets; or

11 That the annual financial statements incorrectly indicate that as at the end of the financial year concerned, the assets of the corporation exceed its liabilities, or has reason to believe that such an incorrect indication is given, REPORT TO CIPC

12 DUTIES OF ACCOUNTING OFFICERS If an accounting officer of a corporation has reported to the Commissioner (CIPC) that the AFS indicate that as at the end of the financial year the corporation's liabilities exceed its assets and he finds that any subsequent financial statements of the corporation concerned indicate that the situation has changed or has been rectified and that the assets concerned then exceed the liabilities or that they no longer incorrectly indicate that the assets exceed the liabilities or that he no longer has reason to believe that such an incorrect indication is given, as the case may be, Must report to the Registrar accordingly. 12

13 COMPANIES ACT 71 of 2008 Independent Accounting Professional Compilation report ISRS 4410 Independent reviewer IR report ISRE 2400 Business Rescue Practitioner Chapter 6

14 1. Is the company a public company or a state-owned company? 2. Is company a private company and controls fiduciary assets >R5m? Yes Audit OM < 100 No Aud/IR Duties of Acc Off No Greater/= than 350 PIS Less than 100 PIS Application of PIS to Private Companies and CCs Owner Managed Greater/= than 350 PIS Yes No Yes Acc Officer EXT Non-Owner Managed Is entity CC Less than 350 PIS and greater/equal to than 100 PIS No Audit/No IR INT Less than 350 PIS and greater/equal to than 100 PIS Int Audit Non CA/CA Ext CA Independent Review

15 Public Interest Score Non-owner managed Public Interest Score Financial Reporting Standard Audit Independent Review PIS 350 IFRS / IFRS for SMEs YES NO YES Independent Accounting Professional s Report PIS 100 and < 350 and AFS were internally compiled PIS 100 and < 350 and AFS independently compiled PIS < 100 and AFS independently compiled PIS < 100 and AFS internally compiled IFRS / IFRS for SMEs YES NO YES IFRS / IFRS for SMEs NO YES YES IFRS / IFRS for SMEs NO NO YES The Financial Reporting Standard as determined by the company for as long as no Financial Reporting Standard is prescribed NO YES YES

16 Public Interest Score Owner managed Public Interest Score Financial Reporting Standard Audit Independent Review Independent Accounting professional s or AO s Report PIS 350 IFRS / IFRS for SMEs YES NO YES PIS 100 and < 350 and AFS were internally compiled PIS 100 and < 350 and AFS independently compiled PIS < 100 and AFS independently compiled IFRS / IFRS for SMEs YES NO YES IFRS / IFRS for SMEs NO NO YES IFRS / IFRS for SMEs NO NO YES PIS < 100 and AFS internally compiled The Financial Reporting Standard as determined by the company for as long as no Financial Reporting Standard is prescribed NO NO YES

17 ANNUAL FINANCIAL STATEMENTS Statement of Financial Position/ Balance Sheet Statement of Comprehensive income/income statement Statement of changes in Equity Statement of Cash Flows

18 REPORTING Audit report Independent review report Accounting Officers Report Compilation Report

19 STEPS INVOLVED IN THE INDEPENDENT REVIEW Client acceptance or continuance Engagement planning Nature of review procedures Where plausibility is in doubt Management representations Documentation Reporting results Who to accept or retain as a client Focus the review Sufficient appropriate evidence More extensive procedures Letter from management Support opinion Appropriate conclusion

20 The core areas to consider in planning are as follows: What does the entity do? Who are the key people? What are the key areas of concern to address? What have we learned from performing previous engagements? What s changed this period? Is there any new business or fraud risks to address? Planning Discussions What materiality to use? Identify financial statement users and their needs. What is our response to areas of risk? Where is more work required, and where can we reduce work? What is the timing of the review engagement and who will be assigned?

21 DOCUMENTING AND EVALUATING RESULTS The major steps in a review engagement process are summarized in the following exhibit: Review Engagement Report Assess Plausibility Design and Performance of Review Engagement Procedures The Foundation The Basic Understanding of the Entity

22 REPORTABLE IRREGULARITIES Is a practitioner obliged to report an irregularity? S29(6)(a) A practitioner who performs a mandatory review engagement in terms of the Companies Act, 2008 and Companies Regulations, 2011, is obligated to report a reportable irregularity.

23 REPORTABLE IRREGULARITIES For a reportable irregularity to exist the following must be confirmed Was the act performed by a person responsible for the management of the entity? Can the act be described as an unlawful act or omission? Will the act cause or likely cause a material financial loss to the company or to any member, shareholder, creditor or investor of the company? Is the act fraudulent or does it amount to theft? Will the act cause or has it caused the company to trade under insolvent circumstances?

24 Financial Accountability Report CoR 30.2

25 Business Rescue Practitioner

26 Business Rescue Practitioner A Business Rescue Practitioner (BRP) is a person who has the competencies to facilitate the rehabilitation of a business in financial distress

27 ACCREDITATION OF BRP CIPC accredits Professional Bodies after meeting the accreditation requirements. Recognised BRP applies for a Licence from CIPC Professional Bodies (PB) BRP Recognition by PB Recognised members applies for a licence from CIPC Accredited professional body recognises members as BRP based on its set criteria

28 BRP COMPETENCE REQUIREMENTS Full member of a recognised Professional Body Technical Competence [Recognised Business Rescue or relevant qualification] Practical Skills [Practical experience/ training]

29 BRP - PROFESSIONAL PATHWAY CPD for BRP Application for BRP to accredited Professional Body Application for CIPC BRP license via Professional Body Upload application of license application to CIPC Confirm of license application outcome

30 ENGAGEMENT LETTER -CC SCOPE OF SERVICES ACCOUNTING RECORDS Section 62 of PREPARATION OF AFS CC Act Responsibility ETHICS List of for accounting services records What will be done by the acc officer on preparation of FS Employees that will be involved Electronic communications Use of software Access to working papers

31 BROAD BASED BLACK ECONOMIC EMPOWERMENT EME Exempted Micro Enterprise Need an affidavit Generic threshold: Less than R10m EME automatically a level 4 51% black ownership Level 2 100% black ownership Level 1 QSE Qualifying Small Enterprise Generic threshold Less than R50m

32 Generic Tourism Sector EME threshold R10m R5m Information &communicat ion Technology(IC T) B-BBEE Marketing Advertising & Communicati ons QSE Threshold R50m R45m Ownership target Black Supplier Development Enterprise Development 25% 25% 30% 45% 2% of NPAT 3% of NPAT 3% of NPAT 1% of NPAT 3% of NPAT 3% of NPAT