Warning of tax losses in new law on audits at small firms

Disclaimer: Please note that this article is at least 12 months old.
Any information herein was accurate when published on 12 July 2010

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Auditors say tax collections could be affected should the requirement for small businesses and private companies to be audited be removed in new company laws, writes Sancizia Temkin.

The debate intensified at the weekend as auditors raised concern about the financial competence of business advisers carrying out independent reviews on small businesses in the near future as the deadline for the new Companies Act looms.

National chairman of PKF chartered accountants and business advisers Andrew Hannington said "The audit profession has long been keeping taxpayers honest. Over the years many a tax scheme ... has been presented to auditors for approval, who reject such (schemes)."

Mr Hannington raised concern about the reporting of tax evasion and other fraud in small businesses, particularly the potential to hide cash sales and value-added tax fraud, if audits are no longer required.

Ursula van Eck, a senior audit partner at BDO, said the paucity of financial skills required to carry out an independent review could lead to higher levels of inaccuracy in financial statements. She said MDs and financial managers relied on audits to spot irregularities.

The South African Institute of Chartered Accountants recently met Trade and Industry Minister Rob Davies and Business Unity SA to discuss the proposed legislation.
The government has indicated it intends to enact the legislation in the fourth quarter of the year.

temkinsc@bdfm.co.za

Disclaimer: Please note that this article is at least 12 months old.
Any information herein was accurate when published on 12 July 2010