Chapter 2: Formation, Administration and Dissolution of Companies
Part C: Transparency, accountability and integrity of companies

R29: Independent review of annual financial statements

  • (1) For purposes of this regulation-
    • (a) "independent reviewer", means a person referred to in regulation 29(4) and who has been appointed to perform an independent review under this regulation; and
      • (b) "reportable irregularity" means any act or omission committed by any person responsible for the management of a company, which-
        • (i) unlawfully has caused or is likely to cause material financial loss to the company or to any member, shareholder, creditor or investor of the company in respect of his, her or its dealings with that entity; or
          • (ii) is fraudulent or amounts to theft; or
            • (iii) causes or has caused the company to trade under insolvent circumstances.
          • (2) This regulation applies to a company, with respect to any particular financial year, unless the company-
            • (a) is exempt, in terms of section 30 (2A), from any requirement to have its annual financial statements for that year audited or reviewed;
              • (b) is required by its own Memorandum of Incorporation, or required in terms of the Act or regulation 28, to have its annual financial statements for that financial year audited; or
                • (c) has voluntarily had its annual financial statements for that year audited.
                • (3) A company to which this regulation applies must have its annual financial statements independently reviewed in accordance with ISRE 2400.
                  • (4) An independent review of a company's annual financial statements must be carried out-
                    • (a) in the case of a company whose public interest score for the particular financial year was at least 100, by a registered auditor, or a member in good standing of a professional body that has been accredited in terms of section 33 of the Auditing Professions Act; or
                      • (b) in the case of a company whose public interest score for the particular financial year was less than 100, by-
                        • (i) a person contemplated in paragraph (a); or
                          • (ii) a person who is qualified to be appointed as an accounting officer of a close corporation in terms of section 60(1), (2) and (4) of the Close Corporations Act, 1984 (Act No. 69 of 1984).
                        • (5) An independent review of a company's annual financial statements must not be carried out by an independent accounting professional who was involved in the preparation of the said annual financial statements.
                          • (6)
                            • (a) an independent reviewer of a company that is satisfied or has reason to believe that a reportable irregularity has taken place or is taking place in respect of that company must, without delay, send a written report to the Commission.
                              • (b) the report must give particulars of the reportable irregularity referred to in paragraph (a) and must include such other information and particulars as the independent reviewer considers appropriate.
                              • (7)
                                • (a) the independent reviewer must within three business days of sending the report to the Commission notify the members of the board of the company in writing of the sending of the report referred to in subregulation (6) and the provisions of this regulation.
                                  • (b) a copy of the report to the Commission must accompany the notice.
                                  • (8) The independent reviewer must as soon as reasonably possible but not later than 20 business days from the date on which the report referred to in subregulation (6) was sent to the Commission-
                                    • (a) take all reasonable measures to discuss the report referred to in subregulation (6) with the members of the board of the company;
                                      • (b) afford the members of the board of the company an opportunity to make representations in respect of the report; and
                                        • (c) send another report to the Commission, which report must include-
                                          • (i) a statement that the independent reviewer is of the opinion that-
                                            • (aa) no reportable irregularity has taken place or is taking place; or
                                              • (bb) the suspected reportable irregularity is no longer taking place and that adequate steps have been taken for the prevention or recovery of any loss as a result thereof, if relevant; or
                                                • (cc) the reportable irregularity is continuing; and
                                                • (ii) detailed particulars and information supporting the statement referred to in subparagraph (i).
                                              • (9) The Commission must as soon as possible after receipt of a report containing a statement referred to in paragraph (c)(i)(cc) of subregulation (8), notify any appropriate regulator in writing of the details of the reportable irregularity to which the report relates and provide it with a copy of the report and may investigate any alleged contravention of the Act.
                                                • (10) For the purpose of the reports referred to in subregulations (6) and (8), an independent reviewer may carry out such investigations as the independent reviewer may consider necessary and, in performing any duty referred to in the preceding provisions of this regulation the independent reviewer must have regard to all the information which comes to the knowledge of the independent reviewer from any source.
                                                  • (11) Where a company is liquidated, whether provisionally or finally, and an independent reviewer at the time of the liquidation-
                                                    • (a) has sent or is about to send a report referred to in subregulation (6) or (8), the report must also be submitted to a provisional liquidator, as the case may be, at the same time as the report is sent to the Commission or as soon as reasonably possible after his or her appointment; or
                                                      • (b) has not sent a report referred to in subregulation (6) or (8), and is requested by a provisional liquidator or liquidator, as the case may be, to send a report, the independent reviewer must as soon as reasonably possible-
                                                        • (i) send a report together with a motivation as to why a report was not sent; or
                                                          • (ii) submit a notice that in the independent reviewer's opinion no report needed to be submitted, together with a justification of the opinion.
                                                        • (12) Every profession recognised by the Minister under Section 60 of the Close Corporations Act, 1984 (Act 69 of 1984), whose members are entitled to perform an independent review as contemplated in subregulation (4)(b)(ii), must annually file a report with the Commission demonstrating that-
                                                          • (a) it has proper mechanisms for ensuring that its members participate in continued professional development and achievement of professional competence;
                                                            • (b) it has mechanisms to ensure that its members are disciplined where appropriate;
                                                              • (c) it is, and is likely to continue to be, financially and operationally viable for the foreseeable future;
                                                                • (d) it keeps and maintains a proper register of its members;
                                                                  • (e) it has in place appropriate programmes and structures to ensure that it is actively endeavoring to achieve the objective of being representative of all sectors of the South African population; and
                                                                    • (f) it meets any other requirements that may be determined by the Commission from time to time.

                                                                    Related Regulations

                                                                    R28: Categories of companies required to be audited

                                                                    Related Sections

                                                                    s30: Annual financial statements

                                                                    Related Notes

                                                                    No related note.

                                                                    Related Forms

                                                                    No related forms.