Saica welcomes Companies Act

South African Institute of Chartered Accountants

The SA Institute of Chartered Accountants (Saica) on Thursday welcomed the new Companies Act as good for small business.

Small and medium-sized companies which had previously been obliged to bear the cost of an audit might now be exempted as the act introduced new criteria, said Saica.

The decision would depend on a newly-introduced public interest score.

“Under this system, a company is allocated points according to the number of its employees, its annual turnover, its stakeholders and the level of third party liabilities at the end of the financial year,” Saica spokesman Ashley Vandiar said.

Points are given for the average number of employees throughout the year, one point per million rand of debt financing, one point for each million rand of turnover, and one point for every individual with a beneficial interest, including shareholders.

Companies with 350 points or more must be audited.

Any company, regardless of point scores, with more than R5 million held for a client in a fiduciary capacity also had to be audited.

Companies scoring between 100 and 350 points must have an independent review conducted by a registered auditor or a chartered accountant.

Those scoring less than 100 are required to have an independent review conducted by anyone who qualifies as an accounting officer, unless circumstances indicate otherwise.

Close corporations are treated the same way as companies.

The cost savings for companies exempted from an audit should be ploughed back into the business or used to reduce debt, said Vandiar. – Sapa

via Saica welcomes Companies Act – Business News | IOL Business | IOL.co.za.

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China’s accounting problem

KPMG offices in Leeds, West Yorkshire, UK. May...

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The Big Four — PwC, Deloitte & Touche, KPMG and Ernst & Youngaudit the books of most of the world’s largest corporations through networks of legally separate audit firms. Their Chinese arms, which also audit Chinese operations of large multinational companies, have also been beyond the reach of PCAOB inspections.

via Analysis: Painful choices loom on China’s accounting problem

The Importance of Accounting Standards

Picture of the Norwegian Parliament.

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By MICHAEL RAPOPORT

U.S. regulators have reached an agreement with authorities in Norway that will reopen Norway’s accounting firms to U.S. oversight.

The deal between the U.S. Public Company Accounting Oversight Board and Norway’s Financial Supervisory Authority, announced Wednesday, provides for the agencies to jointly inspect accounting firms in Norway that audit or help audit U.S.-traded companies, including multinational companies with operations in Norway.

The U.S. board conducts regular inspections of audit firms under its purview to assess their performance and compliance with accounting rules and professional standards. Norway has five firms involved in audits of U.S.-traded companies, including affiliates of each of the Big Four accounting firms.

The board reached similar agreements with the U.K. and Switzerland earlier this year to allow inspections. They and other European countries had been blocking U.S. inspections of their firms since 2008 in a dispute over information sharing. The accounting-oversight body is still negotiating with a number of other countries that don’t allow U.S. inspections, notably China.

Write to Michael Rapoport at Michael.Rapoport@dowjones.com

via Norway and U.S. Strike Deal on Accounting Oversight – WSJ.com.