PUBLIC INTEREST SCORE – WHAT IS THAT?

 
So what is a Public Interest Score (PI Score) and why does it matter to me as a business owner?
A PI Score is a score that determines your company’s public interest. This score is important because the Companies Act requires that all companies calculate their PI Scores and it serves two purposes:

1. To determine the type of AFS that your company should prepare (audited or independently reviewed)
2. The financial reporting standards that apply to your company (IFRS, IFRS for SMMEs or SA GAAP)

 

 
The calculation must be done prior to preparation of the company’s Annual Financial Statements (AFS). This can be done by either your auditor, independent reviewer or an accountant who compiles your AFS.
To calculate your PI Score is a bit technical, but its really not as complicated as it sounds. You just need to grab your latest available financial information and look for your Turnover, Liabilities (external) and Assets also get information on your number of employees, shareholders and directors. Punch all that information on a PI Score calculator (provided by CaseWare SA).
 

What do the PI Score results mean?

 
Companies with a PI Score of less than 100 which are owner-managed only require Compilation AFS. These are usually small companies, with a couple of directors who are involved in the running of the business and they own all the shares in the company.
Owner managed means the shareholders of the company are also directors involved in the management of the company.
The PI Score does not apply to Public companies (listed or unlisted), State owned entities, companies with fiduciary assets exceeding R5 million and companies with a Memorandum of incorporation (MOI) that requires them to be audited.  All of these companies are subject to an audit by registered independent auditors anyway.
For the rest of the private companies, your level of assurance and financial standard to be used depends on whether the

1. company is owner managed or not and
2. whether the AFS have been internally compiled or independently compiled (by an external accountant)

 
Using your PI Score, you can then determine your reporting standard to be used and the required assurance for your AFS as per below:
 

 
As a business owner it important that you do not fall into a trap of having your AFS audited or independently reviewed, unless there is a compelling reason. As you can imagine, a lot more time and work is required for these so they come at a much higher cost. For small businesses compiled annual financial statements are sufficient. We always advise that business owners to get qualified accountants to assist with the preparation of the financial statements as this adds credibility to the story that your financials are telling about your business.
 
If you need assistance with your AFS, we will be more than happy to assist you, please contact us here.