Allow Alchemy to assist with different types of audits. Our audit services include:
- Financial Audits
- Independent Reviews
- Forensic Audits
- Stock Audits
Who needs Financial Statements?
Financial Statements may still be required by various companies or users. These may be required for making economic decisions. Examples of this could be Banks when applying for financing, creditors when applying for a line of credit or even the South African Revenue Service.
What is the standard ‘Audit’ frequency?
Most companies receive an audit once a year, while even larger companies can receive audits monthly. For some companies, audits are a legal requirement due to the compelling incentives to intentionally misstate financial information in an attempt to commit fraud.
Do you know about the changes in the Companies Act?
On the 1st April 2011, the Companies Act 2008 (“Act”) was replaced by both the Companies Act 1973 and Corporate Laws Amendment Act 2006. The change in the Act introduced an “Independent Review” as an alternative form of Auditing the financial statements. Private companies in South Africa are able to replace their annual audits with Independent Reviews.
Another change the act brought about was removing the formation of new CCs, although established CCs can continue to operate.
One of the objectives of the changed act was to align reporting requirements of companies and close corporations, creating consistency and clarity. Another objective was to simplify the regulation of small to medium-size enterprises and make it less costly.
The Act changes brought in options for companies to choose from. Companies can decide to have financial review or audit of their financial statements. The knock-on effect was that companies could save fees relating to auditing and small business were enabled to select a less onerous and costly way of producing financial statements independently reviewed rather than the traditional route of audit under the new Companies Act.
Only public companies are required to be audited under the new Companies Act.
The key shift is that around 90% of all companies that were previously required to obtain an audit report will now be exempt, and the remaining 10% will be subject to either an independent review report or audit.
What is an ‘Audit’
An audit is an objective examination and evaluation of the financial statements of an organization. This is done to ensure financial records are a fair and accurate representation of the business and the transactions performed. Audits are performed internally by employees of the organization or externally by an outside firm.
The South African Revenue Services (SARS) can perform audits to verify the accuracy of a taxpayer’s returns or other transactions. When an audit is being performed by SARS, it can carry a negative connotation and be seen as evidence of some type of wrongdoing by the taxpayer.
What is the value of an ‘Audit’?
Audits performed by outside auditors can be helpful in removing bias when it comes to the verification of a company’s financial records. Audits look for “material errors” in statements.
Audits help provide stakeholders with a sense of accuracy when regarding the state of the subject being audited and can help enable stakeholders to make better, more informed decisions regarding the subject being audited.
Audits performed by third parties can be candid and honest without affecting business operational relationships.
What are the types of ‘Audits’
When it comes to external auditing, there are two different categories of auditors:
- Statutory or otherwise known as External Auditor
- Cost Auditors
An external or statutory auditor works independently to evaluate financial reporting and records whilst Cost auditors evaluate cost statements and sheets to see if they’re free of misstatements or fraud. These type of auditors follow a set of standards different from that of the company or organization hiring them to do the work.
Internal auditors, as the name implies, are employed by the company or organization for whom they are performing the audit. To the best of their ability, internal auditors provide information to the board, managers, and other stakeholders on the accuracy of their books and the efficacy of their internal systems.
Consultant auditors use the standards of the company they are auditing as opposed to a separate set of standards. These types of auditors are used when an organization doesn’t have the resources to audit certain parts of their own operations.