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Independent Review | Annual Financial Compliance for SMEs

Independent Review Annual Financial Compliance for SMEs

Smaller businesses may not require a full annual audit but an independent review of all financial statements and accounting records is necessary to ensure legal compliance. Our expert teams are equipped to provide this service in line with industry best practices, the Companies Act and SARS regulations.

Are you looking for a trusted relationship with experienced financial experts? West-Evans can help your business grow.

Independent Reviews: economical audits for smaller enterprises

An independent review is designed for SMEs and is less intensive than an audit, but it serves the same purpose: to verify the contents of your business’s financial statements and tax documents to provide limited assurance. Our team is fully accredited by the South African Institute of Chartered Accountants to carry out this type of annual financial verification in accordance with the requirements of ISRE2400 and the Companies Act.

How an Independent Review Works

The following steps are involved in a typical independent review:

  • Analysis of Account Balances
    Analysing account balances on financial statements provides a detailed review of each account to ensure accuracy and completeness. This step is crucial for Financial Directors as it helps in detecting discrepancies early and supports the integrity of financial reporting following IFRS and IFRS standards for SMEs.
  • Sampling and Cross-Checking of Financial Data
    Sampling and cross-checking financial data involve verifying a selection of transactions for accuracy against original documentation. This process is vital for you to ensure the reliability of financial records and to mitigate the risk of errors and fraud.
  • Careful Analysis to Ensure Compliance with Regulatory Standards
    This step involves a thorough review to confirm that financial statements comply with applicable accounting standards and regulations. It is essential for businesses as it safeguards the company against legal and compliance risks, including IFRS and IFRS for SMEs, enhancing credibility with stakeholders and regulators.

The key difference between an independent review and an audit is the depth of analysis and the size of financial sampling involved.

  • Time Efficiency and Compliance Timing
    An independent review is designed to be less time-consuming compared to a full audit. This efficiency results from the streamlined processes involved, focusing primarily on analytical procedures and inquiries rather than extensive detail checks. For Financial Directors, this means achieving compliance swiftly and meeting submission deadlines without the protracted engagements typical of audits. This timeliness can be particularly beneficial during periods of tight schedules or when rapid decision-making is required based on financial health.
  • Scope of Engagement and Cost Implications
    While audits require a comprehensive examination of all documents and transactions related to the financial statements, an independent review does not. In an independent review, the emphasis is placed on discussions with management and high-level analytical reviews rather than detailed verification of every document. This approach significantly reduces the manpower and hours required, which in turn lowers the cost of the financial review. For Financial Directors, this means conserving resources while still ensuring that financial statements are prepared accurately in accordance with the applicable financial reporting framework. This can be a strategic advantage, especially for SMEs or companies looking to manage costs effectively without compromising on the quality of financial oversight.

Does your business require an audit or independent review?

The Companies and Intellectual Property Commission (CIPC) scores businesses on a scale known as the Public Interest Score (PIS). If your business scores 350 points or more, you’ll most likely need an annual audit – but smaller businesses frequently score below this threshold and can opt for an independent review.

Our expert auditors and professional accounting team provide a range of compliance solutions and will assess the auditing needs of every new client at West-Evans to determine which type of assessment is most appropriate with the least disruption to your business.