Please help me with reading the Act, Amendment bill and the regulations :
If a private company has a public interest score of more than 350 (or
more than 100 and the financial statements are internally prepared) will
it have to be audited even though all it's shareholders are directors ?
I cannot make out whether the section 30(2A) exemption can apply if the public interest score is higher than the threshold.(Please see the public interest score calculator and decision tree under documents and brochures)
"28. Categories of companies required to be audited
See s. 30 (2), read with 30 (7)
(1) This regulation applies to a company unless, in terms of section 30 (2A), it is exempt from having its annual financial statements either audited or independently reviewed."
You therefore need to consider section 30(2A) which states:
"If, with respect to a particular company, every person who is a holder of, or has a beneficial interest in, any securities issued by that company is also a director of the company, that company is exempt from
the requirements in this section to have its annual financial statements
audited or independently reviewed, but this exemption—
(a) does not apply to the company if it falls into a class of company that
is required to have its annual financial statement audited in terms of
the regulations contemplated in subsection (7)(a); and
(b) does not relieve the company of any requirement to have its financial statements audited or reviewed in terms of another law, or in terms of any agreement to which the company is a party.''
Therefore generally a company where all the shareholders are also directors would not be required to be audited.
The regulations go on to state:
"(2) In addition to public companies and state owned companies, any company that falls within any of the following categories in any particular financial year must have its annual financial
statements for that financial year audited:
(a) any profit or non-profit company if, in the ordinary course of its primary activities, it holds assets in a fiduciary capacity for persons who are not related to the company, and the aggregate value of such assets held at any time during the financial year exceeds R 5 million;
(b) any non-profit company, if it was incorporated––
(i) directly or indirectly by the state, an organ of state, a state-owned company, an
international entity, a foreign state entity or a company; or
(ii) primarily to perform a statutory or regulatory function in terms of any legislation, or to carry out a public function at the direct or indirect initiation or direction of an organ of the state, a state-owned company, an international entity, or a foreign state entity, or for a purpose ancillary to any such function; or
(c) any other company whose public interest score in that financial year, as calculated in accordance with Regulation 26 (2)––
(i) is 350 or more; or
(ii) is at least 100, but less than 350, if its annual financial statements for that year
were internally compiled."
On my reading, if 2(a), (b) or (c) apply, you would require an audit as the minister has specifically created regulations which amended the exemption that is created in section 30(2A).