Audits are recommended for all entities having an annual turnover of R30 000 000 (Thirty Million Rands) or a staff complement of 35 staff.
All companies at present (although this is about to change once the Companies Act of 2008 is promulgated) are required to have an annual audit. Some other entities may also be required to undergo an audit due to their constitution, trust deed, banking requirements or other legislation. These include local governments, non profit agencies and other organizations receiving government grants.
Moreover, some financial institutions require audits of companies or close corporations based on the financing amount and/or the bank’s assessment of the company’s risk. Also, companies with absentee ownership (such as those owned by investment firms, or individuals who no longer run the business) may order audits as checks of their management teams.
Shareholders, creditors, bankers, financiers, management and other stakeholders often need assurance that the financial statements of an entity accurately represent the true financial position of a company.
These users of the financial statements often have different levels of risk tolerance. Generally, there are three main levels of assurance which we will be glad to further explain to you, should it appear confusing. We provide three levels of assurance to meet your requirements as follows:
Audit – Highest Level of Assurance
An audit provides the highest level of assurance. An audit is a methodical review and objective examination of the records (documented, electronic and visible) of an entity, including the verification of specific information as determined by the auditor or as established by general practice.
An audit would include a review of internal controls, testing of selected transactions, and communication with third parties. Based on our findings, we issue a report on whether the financial statements are fairly stated and free of material misstatements.
An Audit allows you to…
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- Satisfy stakeholders such as employees, customers, suppliers and pressure groups, as well as the investing community such as bankers and creditors, as to the credibility of published information.
- Check the payment of corporate tax, Value Added Tax, and other taxes accurately, thereby avoiding interest, penalties, and investigations.
- Comply with banking covenants.
- Help deter and detect material fraud and error.
- Facilitate the purchase and sale of businesses.
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Here’s what you get…
The highest level of assurance because we obtain information from both inside and outside your entity. Typically, we’ll have written communication with:
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- Your customers, to check outstanding receivable balances,
- Your banks, to confirm cash or debt balances and terms,
- Your vendors, to verify outstanding payable balances, and
- Your attorneys, for information on pending or threatened legal action.
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We also perform physical inspections by observing your inventory counting methods and perform test counts. We document and test each operating cycle, including sales and cash receipts, expenses and cash disbursements, and payroll. Our audit papers include a detailed work program to document the examinations and testing performed, as well as the client’s supporting work papers.