Public Audit Act, 2004 (Act No. 25 of 2004) Notices Directive: Unlisted Entities Notice No. 648 of 2007

 

Notice No. 648

25 May 2007

 

 

Under the powers vested in me by section 2 of the Public Audit Act, 2004 (Act No. 25 of 2004) (hereafter referred to as the PAA), I, Terence Mncedisi Nombembe, Auditor-General of the Republic of South Africa, hereby determine the following:

 

Audits of public entities not listed in terms of the Public Finance Management Act, 1999 (Act No. 1 of 1999)

 

 

Auditees for whom the format and submission period of, the information to be contained in and other relevant requirements in respect of the financial statements are not prescribed by any legislation are subject to the contents of Audit Circular 1 of 2005 and Audit Circular 1 of 2007, issued as annexures to this notice.

 

In terms of Audit Circular 1 of 2005 and Audit Circular 1 of 2007, these entities are required to prepare their financial statements in accordance with SA Statements of Generally Accepted Accounting Practice (GAAP). SA Statements of GAAP constitute a financial reporting framework set by an authorised/recognised standard-setting body, and my audit report on the financial statements will therefore be issued in terms of International Standard on Auditing (EA) 700R.

 

Where entities fall within the scope of Audit Circular 1 of 2005 and Audit Circular 1 of 2007 and, as agreed with the auditors, it would not be cost effective or possible to compile financial statements in terms of SA GAAP due to their size, they may prepare their financial statements on an entity specific basis of accounting as envisaged by South African Auditing Practice Statement (SAAPS) 2. This would typically apply to hospital boards, committees, museums, funds and trusts, et al. The audit report to be issued will be as detailed in paragraph 2 hereunder.

 

 

In terms of section 20(2) of the PAA an audit report must reflect at least an opinion or conclusion on whether the annual financial statements of the auditee fairly present, in all material respects, the financial position at a specific date and the results of its operations and cash flow for the period which ended on that date in accordance with the applicable financial framework and legislation.

 

In this respect I have determined that where an auditee prepares financial statements on an entity specific basis of accounting (in the absence of formal guidance by legislation), no opinion on the fair presentation of the financial statements will be expressed and an opinion will only be given on whether the financial statements have been prepared, in all material respects, in accordance with the basis of accounting as disclosed, in terms of South African Auditing Practice Statement (SAAPS) 2.

 

 

Where an audit is undertaken in terms of the requirements of the PAA, and there is no applicable legislation setting out the period within which the audit report is to be submitted to the relative legislature, the Auditor-General must, in terms of section 21(2) of the PAA, submit such audit report to the relevant legislature within a reasonable time. I have determined a period of up to a maximum of six months after the financial year-end of the auditee, depending on the circumstances, to be a reasonable time.

 

Any enquiry related to this notice should be addressed to:

 

 

J H van Schalkwyk

Business Executive: Audit Research and Development

The Auditor-General

Tel: (012) 422 9823

Fax (012) 422 9822

Email: [email protected]

 

Signed and approved:

 

 

 

T M Nombembe

Auditor-General

 

Glossary:

GAAP = Generally Accepted Accounting Practice

ISA = International Standards on Auditing

PAA = Public Audit Act, 2004 (Act No. 25 of 2004)

SAAPS = South African Auditing Practice Statement

 

Audit Circular 1 of 2005 and Audit Circular 1 of 2007 can be found in Government Gazette No. 29919 dated 25 May 2007.