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Independent review vs audit – why should I care?

Independent Reviews (IRs) were introduced as an alternative to an audit for certain types of companies. Conducting IRs is a potentially massive business opportunity for those who are licensed (through SA Institute of Business Accountants), to do this. Many audits previously done by auditors can now be handled by an Independent Reviewer.

The Companies Act of 2008 introduced the IR to make it less of a financial burden for smaller and start-up companies and many companies have switched to them because they’re quicker, cheaper and fit for purpose.

A bank will often request an IR (rather than an audit) before lending money to a company. Stakeholders and key shareholders may ask for an IR to ensure their money is in safe hands.

What are the key differences between IR and audit

An audit is a more thorough process and usually starts with interviews with the CEO and senior executives. The auditor must corroborate the ending balances of client accounts and disclosures by cross-checking against source documents, tests of internal controls, third party investigations and other processes outlined in the International Standards on Auditing (ISA). The audit is based on a more thorough sample of transactions than an IR but is by no means comprehensive.

An Independent Review begins with an examination of the account balances provided by management, but with far more limited sampling and cross-checking of data. The amount of time invested in an IR is lower than for an audit.

What are the potential consequences to a company of not having its financial statements audited?

Investors rely on financial statements to assess a company's worth, while management relies on internal financial reports for sound decision-making. Inaccurate reports can lead to bad decisions or make your company look less valuable than it is. They can also land you in legal hot water.

How can we help you?

Advisory has several specialist strengths. These include mergers and acquisitions, raising new capital for clients and assisting to unlock existing capital which may be tied up in underperforming assets or structures.

Is it true that a tax opinion from a Tax Practitioner gives me immunity from penalties?

This is commonly misunderstood. An opinion issued by a registered tax practitioner that complies with section 223 of the Tax Administration Act can be used as relief against a specific type of penalty known as a substantial understatement penalty. It does not give you immunity from other understatement penalties and SARS is entitled to apply a penalty in respect of an understatement, despite the taxpayer relying on a formal tax opinion.

How do investigators go about the process of locating the financial information you need for a specific case?

Due to the broad scope and nature of commercial crime, one almost always has to take a unique approach to each case. The key is to locate the people or organizations that will have the right data. In the case of fraud, for instance, it means tracking out where it’s likely to be concealed. This sometimes requires ‘out of the box’ thinking.

As the problem is huge, where does one start?

Bishop Tutu once said; “Do your little bit of good where you are; it’s those little bits of good put together that overwhelm the world.” Our goal is to do our “little bits of good” and collaborate with those who have the same vision. Together, we may just be able to “overwhelm” the world. If not the world, at least we can make a difference in the lives of thousands of young people’s lives.

Where does your funding come from?

We at Nolands believe we have a responsibility and a mandate to do all we possibly can to make a difference in our nation. We also know we can’t do it on our own and therefore have decided to collaborate with many organisations who are actively involved in the communities where we operate. Nolands, along with many of our loyal clients are dedicated to making a difference in the lives of our youth.