presentation footer1 portfolio committee on trade and industry - comments on the co- operatives...
TRANSCRIPT
Presentation Footer 1
Portfolio Committee on Trade and Industry - Comments on the Co-
operatives Amendment Bill
24 July 2012 Juanita Steenekamp
Project director: Governance and Non-IFRS Reporting
SAICA
The South African Institute of Chartered Accountants
Voluntary professional body
Members – Chartered Accountants
To qualify – 4 year degree + articles (3 yrs) + 2 board
exams
32 000 members
Co-operatives – regulatory scheme
Prefer same schemes for company, close corporation and
co-operative in terms of accounting and assurance
Bill
• Category A – annual accounting report
• Category B – independent reviewer’s annual accounting
report
• Category C – auditor’s annual accounting report
Co-operatives - accounting
Definitions
• Annual accounting report – defined as financial statements, social
report and management report
• Financial statements • Statement of financial position (balance sheet)
• Statement of comprehensive income (income statement)
• Statement of changes in equity
• Statement of cashflows
• Notes
• Management report and social report not defined
Co-operatives - accounting
Minister must publish within 3 months after commencement publish a
cooperative reporting system framework•Difficult, if framework not published then no framework exist and no audit or review could be
done on annual financial statements using the framework
•In some instances can use frameworks prescribed by Financial Reporting Standards
Council if prescribed in Co-operatives Act
•Category A co-operatives might only use an annual return, compilation of financial
statements, social and management reports more onerous than for small private companies
Co-operatives - assurance
• Auditors annual accounting report – annual accounting report examined and
evaluated by auditor - no such report
Auditor provides an audit report, based on prescribed framework
• Independent reviewer’s annual accounting report - annual accounting report
examined and evaluated by independent reviewer – no such report
Independent reviewer’s report, based on prescribed framework
Refer to Companies Act – audit report & independent review report
Co-operatives - assurance
Definitions:
• Audit – not same as Auditing Professions Act
• Independent review – not same as Companies Act
• Independent reviewer - means a person registered with an accredited
professional body contemplated in Chapter III of the Auditing Profession Act,
who does not have a personal financial interest in the co-operative or a
related or inter-related co-operative.• More restrictive than Companies Act
• Possibly allow members of other professional bodies
Definitions already exists in other laws – to have other definitions would confuse
the public, members and people identified to perform the functions.
Co-operatives - assurance
Categories of primary co-operatives:
Minister must prescribe monetary threshold for revenue (looking back) or
projected annual revenue (forward looking)
Revenue not defined
Is this sufficient to identify “public interest”?
Every employee –
average number
Every R1m turnover
Every R1m 3rd party liabilities
Every beneficial interest holder
1 Point
11
Companies Act – Public Interest Score
Co-operatives – other
• Consideration of audited or independent reviewed financial statements –
AGM chairperson accepts report • Not possible as auditor / IR prepares report. Co-op cannot decide to accept or not
• Annual Financial Statements and audit / independent review report must be presented at
AGM
• Governance principles – not identified, in SA KING III recognised principles,
too onerous for many co-operatives
• Co-operatives must retain records for 7 years, thereafter must archive –
more onerous than Companies Act
Co-operatives – conclusion
• Separate accounting and assurance, allow for exemption for certain
categories of co-operatives
• Use of terminology as per Companies Act, 2008 where possible
• Do not have more onerous requirements for co-operatives than companies
• Use of accounting frameworks as per Financial Reporting Standards
Council, where possible