Independent review requirements for businesses in South Africa

Table of Contents

Independent review requirements for businesses in South Africa

The purpose of an independent review

Per the Companies Act 71 of 2008, South African legislation expects local non-public companies to undergo certain reviews; depending on whether they meet the auditing or independent review requirements; and submit their financial statements before the end of the financial year. For most, this is an alternative to the previously required audit.

Independent reviews provide a moderate level of assurance. 

Third parties looking to invest in your company will ask for assurance that your necessary audited financial statements (AFS) are materially sound. Independent reviews can also be used to intervene in your finances and present you with secure and compliant practices.

Independent review requirements: do I fall within the category?

Management and the compilation of AFS

If the company is managed by the owner, then an independent review isn’t necessary. Such is the case for businesses with a memorandum of incorporation (MOI). Businesses owned by trusts and are thus not owner-managed require an independent review. How the company’s financial documentation is compiled; whether internally or externally; also plays a significant role. Externally (or independently) compiled documents require a review. 

Tax returns may only be submitted after the completion of the independent review. It is, however, as mentioned, beneficial to take up an internal review if you want to get to grips with your financial standing. Such can be arranged within your accounting department more frequently. 

Your company’s public interest score 

There is a set public interest score (PIS) calculation that forms the basis of whether or not a company requires an independent review. The companies and intellectual property commission (CPIC) require this PI score calculation at the end of every financial year. However, the above-mentioned is still applicable. If you have a PI score above 100 points after calculations, yet less than 350 points, your company fits the independent review requirements. 

Below 100 points would give you the option to undergo a review with an accounting officer or registered member of an accredited professional body. For scores above 350, the company will need its financial statements to be audited.

Qualifications needed by independent reviewers

Not any accountant can conduct an official independent review. 

Members of the professional body of South African accountants that have obtained the designation of Business Accountant in Practice and a certificate in Independent Review Engagements may conduct a review. 

So may accountants that have qualified as an accounting officer. Auditors may, as well as the South African for business accountants (SAIBA) can also conduct an independent review. The main idea is that the reviewer be independent of the institution. If you know a chartered accountant, then you have yourself a possible reviewer.

The procedures of an independent review

If you’ve met the independent review requirements then you will expect your reviewers to follow a process; which also includes communicating with management and other related parties. Even though the audit and review processes differ, which applies regardless if you’re being audited or reviewed, they adhere to International financial reporting standards.

In South Africa, there are generally accepted accounting practices (GAAP) interpretations for local instances. Such interpretations still follow the International Framework for Assurance Engagements.

Approach: risk assessment, planning, and selection

After the risk assessment, where they research the company within the relevant industry, a sample of non-financial records along with financial transactions and other documentation are thus picked. This is also used for cross-examination purposes. The materials used play a role in the specific procedures and evaluation, which determines the length and cost of the review. 

The independent reviewers may not be involved when collecting the documentation. Before embarking on the process, they must also determine the necessary means of engagement; being either a compilation or review. 

Inquiry and analytics

Substantive approaches such as cross-referencing and on-site inspection are carried out. This means engagements with third parties. The whole purpose is to ensure no misstatements are within the records. Included within the inquiry are consultations with management, where they may further ask about previous dealings with companies and more. 

Any significant changes to transactions or contracts which reflect in the journals will be addressed. These schedule changes are hotspots for non-compliant or fraudulent activity and reviewers won’t turn a blind eye.


Independent reviews provide limited assurance and an opinion is reported in negative assertion; “we do not find…”.

If there are reportable irregularities, they should be followed by planned measures to rectify the mistake. 

Reportable Irregularities (RI)

There are independent review requirements before reporting the irregularity. Namely; was the act an omission, unlawful, or fraudulent? Did it amount to theft or a loss in the company for beneficiaries involved? Was the person involved in the management of the entity? Have they caused the company to trade under unlawful circumstances?

If these questions prove there is malpractice the particulars of the reportable irregularities are declared. The irregularities are mainly limited to activities affecting misstatements in the compiled financial statements. Are they clear and concise? If so, there will need to be steps to rectify the malpractice or a solution applied if the mistake is of that nature. 

Information about the authors, publication, and publisher

Picture of Author - Arnaud Brunel

Author - Arnaud Brunel

After a 15 year long career in International Banking and Compliance, Arnaud launched multiple businesses in Cape town. He still heads 2 of these businesses today in the Digital Marketing Industry with Brunel Studios and in the Financial Industry with Thryv.

Picture of Publication & Publisher - Thryv Accountants

Publication & Publisher - Thryv Accountants

Thryv accountants is a private accounting company that focuses on outsourcing of the financial functions of small and medium companies in Cape Town and other regions of South Africa.

The publications on this website are for information purposes only. They are based on our professional opinion.

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