Annual Financial Statements
Annual Financial Statements is a legal requirement and must comply with prescribed standards in accordance with the International Financial Reporting Standards (IFRS) or IFRS for SME’s. This is a worldwide reporting tool that enables third parties such as Banks and SARS to determine how well a business has performed over a period.
Financial statements are also a tool that you, as the business owner can use to measure your business performance. As a business owner you want to know if your business is making a profit and is solvent. All major banks and independent lenders would require Annual Financial Statements when they consider funding in the form of either an overdraft or a business loan which can be used to either expand your business or as short term working capital.
When preparing Financial Statements, we collate information that has been processed into a trial balance. We also confirm all the balances in the Balance Sheet with supporting schedules such as bank statements, stock sheets, loan accounts and asset registers of the company. Compliance with the tax authority (SARS) is also confirmed and the balances shown in the Financial statements.
Compilation of Financial Statements
Some businesses are required by laws governing the entity to prepare annual financial statements. Others may have no legal requirement for financial statements, but may still need to prepare financial statements for the purposes of satisfying financial institutions such as their local bank or public institutions such as SARS.
Historically, all companies required an audit and traditionally the auditors of the company also prepared the financial statements. A new era dawned on 1 January 2015 with the introduction of section 90 of the Companies Act. Specifically, section 90(2) of the Companies Act precludes an auditor from also maintaining the financial records or preparing the annual financial statements of an entity. In layman’s terms, this means that every entity which requires a statutory audit may no longer use the services of their auditor to assist them with their bookkeeping or the preparation of their annual financial statements in any way. Practically, this has created a major problem for many companies and, in this regard, The Tax Shop is able to adequately meet your need to compile financial statements and to remain compliant with section 90 of the Companies Act.
Included in our financial statement compilation services are the following:
- Annual financial statements for all entities and organisations required by law.
- Financial statements for organisations and individuals not required by law.
- Provisional financial statements and management accounts.