XBRL REPORTING COMPULSORY from 1 July 2018

XBRL REPORTING COMPULSORY from 1 July 2018

The Companies and Intellectual Property Commission (“CIPC”) has introduced a new way of lodging the Annual Financial Statements (“AFS”) which must accompany the Annual Returns of a company from 1 July 2018.

Previously CIPC received all Annual Financial Statements in PDF and excel format and manually analysed them. This process was extremely slow. CIPC does not take non-compliance lightly and in a recent move, the CIPC’s power to impose administrative fines, on those entities that ignore compliance notices, was confirmed by the SA High Court.

XBRL reporting is currently being used in over 50 countries around the world and involves digitally tagging your AFS which allows for easy comparison.

The CIPC have estimated that approximately 100 000 companies will be required to submit their AFS in the XBRL format from 1 July 2018. Noncompliance could be extremely costly. The CIPC won a High Court order empowering them to impose a 10% of annual revenue penalty on companies that fail to prepare their annual financial statements within 6 months of year-end.

In terms of Section 33 of the Act read together with Regulation 28, 29 and 30 of the Companies Regulations of 2011, the following entities must submit their AFS in XBRL with their annual returns:

• Companies whose Memorandum of Incorporation (MOI) or Articles of Association requires the auditing of their financial statements;
• Private or personal liability company, in the ordinary course of its primary activities, holding assets in a fiduciary capacity for persons who are not related to the company, and the aggregate value of such assets held at any time during the financial year exceeds R5 million;
• Private or personal liability company that compiles the AFS internally (for example, by its Financial Director or its owner) and that has a Public Interest Score (“PIS”) of 100 or more;
• Private or personal liability company that compiles AFS by an independent party and that has a PIS of 350 or more; and
• Private or personal liability company not managed by its owners, which opted to have its AFS audited or voluntarily included audit as part of its MOI, may be subjected to an independent review if:
  • It compiles its AFS internally and its PIS score is less than 100; and
  • AFS compiled independently and its PIS is between 100 and 349.
• All close corporations who meet the same requirements above

The risks of non-compliance

Non-compliance of entities that contravene the laws in terms of Section 175 of the Act, will be subjected to the following:

• Failure to submit the CIPC Annual Returns – The de-registration of the entity and penalties may apply; and
• Failure to submit AFS – An investigation will be conducted. After investigation a compliance notice will be issued mentioning a deadline date to comply with. Further failure to comply with the deadline date will result in a fine which may be issued, or formal prosecution may be investigated.

How can we help you?

Office Executives is able to assist all annual return submissions and converting your existing AFS to the XBRL format through our CIPC approved software provider.

Please do not hesitate to click on contact us should you require any assistance. https://www.officeexecutives.co.za/contact-us/