So if your practice is registered as an Incorporated Company, this will affect you.? Before these changes, it was mandatory to have your books of accounts audited on an annual basis, costing up to R20 000 per annum to do.
The new regulation allows for a determination based on a public-interest point system of your business.? If you score above a certain amount, you have to be audited. This is worked out as follows:
- A company scores 1 point for every employee
- A company scores 1 point for every R1 million in turnover per annum
- A company scores 1 point for every R1 million in third-party debt
- A company scores 1 point for every shareholder of the business
If you employ your own accountant, who does your books internally, a score above 100 points means you need to be audited. Companies that outsource their accounting function only have to undergo a compulsory annual audit if they score above 350 public-interest points.
Now we as medical practitioners would seldomly score over 100 points, and can not be silent shareholders in our practices we play an active role in the management of our practices. The regulation states that in this case only annual financial statements are needed.
It is however my opinion that choosing to voluntarily audit your books is still a strong option. My reasons being:
- An audit of one’s books, and the relevant tax advice that goes with this may well off-set the actual cost of the audit, through good business structuring and practice
- The benefit of an external control mechanism to the internal processes, management and professional attitude of all staff should not be under estimated
- If you are wanting to sell your practice in the near future, a set of audited results hold a lot of benefit
- Financiers may request audited results
I would love to hear some of your thoughts on this. If you would like to discuss the issue further, and its impact on your business, feel free to make contact through email or a comment below: