An independent review is like a mini-audit. It is the latest addition to the Companies Act that provides limited assurance.
Many business owners opt for an audit without knowing that the choice of an independent review is available, so breaking down the difference between an independent review and an audit is important.
An accounting professional may review a business’s financial statements via particular enquiries with the aim of simply determining that no financial errors or miscalculations have occurred.
This type of financial review requires less rigorous investigation, and the costs inevitably are less than expected for an audit.
This came into effect when the Companies Act 2008 was revised removing the requirement for all companies to be audited. The Act has effectively introduced an alternative for start-ups and small to medium sized businesses (who may find an annual audit a financial burden during their early years).
The Act now provides for two types of financial reviews, an independent financial review and an audit. Choosing one or the other depends entirely on whether they fall above or below a particular threshold.
Points are given to a business according to their annual turnover and this threshold is known as the Public Interest Score (PIS). Points are awarded by the amount of money owed to third parties, number of employees and number of shareholders.
Businesses that score below 350 may opt for an independent review whereas a PIS score of 350 or more must undertake an audit.
The addition of the independent review gives business owners more choices to better suit their business needs.
At Carampako through our review of client financials we are able to determines their Public Interest Score, and provide insights and advice on which option to take (to opt for an audit or an independent review).
If you opt for an independent review then we examine business’s financial statements to determine that no financial errors or miscalculations have occurred and report on our findings.
Due diligence is an audit or investigation of a potential investment for an investor to provide some level of assurance on the investment. Often purchase agreements are dependent on such an investigation before finalisation of the agreement. This is the process by which the investor is satisfied that they are purchasing what they have been presented with. There are several types of due diligenceRead More