A company’s financial year-end date is set when the company is registered at CIPC. In South Africa it can be any date of the year, unlike in other countries where the dates are sometimes fixed. A company can change its year end with a Special Resolution resulting in a once off shorter or longer financial year.
A company can prepare financial statements during the year and must prepare annual financial statements.
What are financial statements?
This is a document that is compiled to reflect the status of a company’s finances for a period up to a specific date. Financial statements must be compiled in accordance with a recognised framework (e.g. IFRS) to ensure consistency in the result, to make it easier for users to understand the business. Financial statements are regulated and misrepresenting financial statements are a serious offence.
How does financial statements differ from management accounts?
Management accounts can be in any format to enable the company’s management team to manage the business. The format is not regulated. These management accounts are usually not made available to parties outside the company since a certain level of understanding of the day to day business of the company is required to interpret these management accounts.
How does Annual financial statements differ?
Annual financial statements, unlike other financial statements, must span the financial year of the company. They should adhere to a recognised financial framework (e.g. IFRS). These are the financial statements that must be approved by the directors (as a fair reflection of the businesses finances) and is presented to the shareholders at the Annual Shareholder meeting for approval.
When must Annual financial statements be prepared?
Annual financial statements must be prepared withing 6 months of the company’s year-end to enable them to be presented to the shareholders for approval. All companies and close corporations (irrespective of size) is required to prepare annual financial statements.
Impact on SMME’s
Since you need Annual financial statements to complete your Annual return to CIPC, and since directors also need to declare that Annual Financial Statements were prepared as required by the Companies Act, compliance is non-negotiable.
PPHC Global have a team of accountants to compile Annual Financial Statements for clients and also assist them with the required review requirements.