Regulation 29 of the Companies Act , No. 71 of 2008 deals with the `Independent Review of Annual Financial Statements’.
For the purpose of this Regulation-
- `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
- `reportable irregularity’, means any act or omission committed by any person responsible for the management of a company, which-
- 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
- Is fraudulent or amounts to theft; or
- Causes or has caused the company to trade under insolvent circumstances.
When an independent review of a company's financial statements must be carried out
Regulation 29 (4) states that `An independent review of a company’s annual financial statements must be carried out-
- 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
- In the case of a company whose public interest score for the particular financial year was less than 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
- 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 69 of 1984).
Steps to alert CIPC about an "Reportable Irregularity"
- 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. This is known as the `first report’.
- The report must give particulars of the reportable irregularity referred to above and must include such other information and particulars as the independent reviewer considers appropriate.
- The independent reviewer must within three (3) 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 sending of the report referred to in regulation 29(6) and the provisions of this regulation.
- The First report of the reportable irregularities (RI’s) from the Independent Reviewer to CIPC must include the letter which was sent to the board of directors notifying them of the reportable irregularity.
- The independent reviewer must as soon as reasonably possible but not later than 20 business days from the date on which the report referred in regulation 29(6) (the first report) was sent to the Commission-
- Take all reasonable measures to discuss the first report with the members of the board of the company;
- Afford the members of the board of the company an opportunity to make representations in respect of the report; and
- A Second Report must be sent by the Independent Reviewer to the Commission within twenty (20) business days from the date of the First report. The second report must include the independent reviewer’s opinion as to whether:
- no reportable irregularity has taken place or is taking place; or
- 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
- the reportable irregularity is continuing; and the detailed particulars and information supporting his conclusions.
- If the second report from the independent reviewer states that the reportable irregularity is continuing, the Commission must notify the appropriate regulator in writing and provide a copy of the reportable irregularity to them. The Commission may investigate any alleged contravention of the Act.
- Independent Review reports must be e-mailed to: email@example.com