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profit company must be audited if it meets any one of the following criteria:
• If such a company, in the ordinary course of its primary activities, holds
assets in a fiduciary capacity for persons who are not related to the
company, and the aggregate value of such assets held at any time
during the financial year exceeds R5 million; or
• Any other company whose public interest score in that financial year
is 350 or more; or
• Any other company whose public interest score in that financial year
is at least 100 (but less than 350) and whose annual financial
statements for that year were internally compiled. Commercial

The Companies Act provides for a public interest point system which is aimed
at calculating the extent of the stake which the South African public holds in
a company and in turn determines whether the company should be audited
or not. A company scores one point for every employee, one point for every
R1 million in turnover, one point for every R1 million in third-party debt and one
point for every shareholder it has.

The lower level of the threshold provides for those companies that do their
accounting internally and specifically employ their own accountant for this
purpose instead of outsourcing it to an independent firm of accountants. Such
companies must have their books audited if they score at least 100 public
interest points. Companies that use external accountants to do their books only
have to undergo annual auditing if they score 350 public interest points or more.
A company may voluntarily elect, either by a directors’ resolution or a shareholder
resolution depending on its MOI, to have its annual financial statements audited
or include an express audit requirement in its MOI.
In contrast, some private companies may purely be required to have their
annual financial statements independently reviewed. This is the case for private
companies whose public interest score in a specific financial year is at least 100
(but less than 350) and whose annual financial statements for that year were
independently compiled, as well as companies whose public interest score in
that financial year is less than 100.
It is important to also note the provisions of section 30(2A) of the Act, which
provides an exemption to both audit and independent review. Should every
person who is a shareholder of a company also be a director of that company,
such company is exempt from the requirements to have its annual financial
statements audited or reviewed, provided it does not fall into a class that is
specifically required to do so in terms of the Act or other legislation or any
agreement to which it is a party. If a company is not required to be audited but
is not exempt in terms of section 30(2A), then its annual financial statements
must be independently reviewed.

What should be clear from the above is that not all companies need to be

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