From July 2018 the Companies and Intellectual Property Commission are going to require that all entities in conjunction with the submission of their annual returns submit their financial statements in a format known as iXBRL. iXBRL is a computer readable format that allows CIPC to obtain certain crucial information from the financial statements.
Financial statements are a structured representation of historical financial information, including related notes, intended to communicate an entity’s economic resources or obligations at a point in time in accordance with a financial reporting framework. The related notes ordinarily comprise a summary of significant accounting policies and other explanatory information.
Financial statements are a very important document for any business. They are not only required so that management and owners understand the operational results of the business they are needed by law by the South African Receiver of Revenue. In terms of the new CIPC requirements you will be required to submit your financial statements to them on an annual basis as well.
Why do I need a third party for preparing financial statements?
In terms of Section 90 of the Companies Act audit firms are not allowed to provide certain other services to their clients, one of these such services is preparing financial statements.
A company however can internally prepare their own financial statements; however, it often works out to be more cost effective for an entity to outsource this function as the preparation of financial statements in excel or word is time consuming, or if a programme is used a specific skill set must be had in order to be able to use the software.