An Independent Review under the South African Companies Act, 2008 (Act No. 71 of 2008) is a type of financial statement review that serves as an alternative to a full audit for certain private companies and non-profit companies. It is a less rigorous and more cost-effective assurance engagement than an audit, but it still provides a level of credibility to financial statements.

Key Aspects of an Independent Review:

1. Applicability
   • Private companies and non-profit companies that are not public interest entities may qualify for an Independent Review instead of an audit.
   • Companies with a Public Interest Score (PIS) of less than 350 and not requiring an audit by their Memorandum of Incorporation (MOI) can undergo an Independent Review.
   • If the PIS is below 100, the review may be conducted by an independent accounting professional.
2. Public Interest Score (PIS)
   The PIS is calculated as follows:
   • 1 point for each employee (average per year).
   • 1 point for every R1 million in turnover.
   • 1 point for every R1 million in third-party liabilities.
   • 1 point per individual/entity holding direct or indirect beneficial interest in the company.
3. Difference Between an Independent Review and an Audit
   • Independent Review: Provides limited assurance, with a focus on analytical procedures and inquiries rather than detailed verification of transactions.
   • Audit: Provides reasonable assurance through substantive testing and verification of financial transactions.
4. Who Can Perform an Independent Review?
   • A registered auditor.
   • A member of a professional accounting body recognised by the Independent Regulatory Board for Auditors (IRBA).

When Is an Audit Required Instead of an Independent Review?

• If the company is public or state-owned.
• If required by MOI, shareholders, or lenders.
• If the PIS is 350 or higher.
• If it is a regulated entity (e.g., financial services providers).