In 2008, the Companies Act was revised, removing the requirement for certain companies to be audited.
The Companies Act provides for two types of financial reviews, an independent financial review and an audit. Which one is needed is based on the companies Public Interest Score (PIS).
A company with a PIS of 350 or more must undertake an audit and a company with a PIS below 350 may opt for an independent review.
An independent review provides limited assurance. An accounting professional may review a company’s financial statements through enquiries with the outcome of determining that no financial errors have occurred. This type of review requires a less demanding investigation, and the costs are less than expected for an audit.
An audit requires an independent auditing team comprised of qualified auditors to review financial statements through in-depth procedures. These financial statements are comprised of transactions and documents provided by the business undertaking the audit. An audit provides the highest level of assurance, otherwise known as reasonable assurance. It carries higher authority than a review. As an audit requires far more detailed investigation into a business’s financial statements, its generally a more expensive option.
Please note that the information provided does not constitute legal or professional advice, but rather the applicability of existing theory to a given practical situation. Due care is taken to ensure that the information is correct, but it remains subjective and an interpretation of application of information.