1. Presentation Footer1 Portfolio Committee on Trade and Industry - Comments on the Co- operatives Amendment Bill 24 July 2012 Juanita Steenekamp Project director: Governance and Non- IFRS Reporting

2. SAICA The South African Institute of Chartered Accountants Voluntary professional body Members – Chartered Accountants To qualify – 4 year degree + articles (3 yrs) + 2 board exams 32 000 members

3. SAICA - members Auditors (IRBA)AccountantsAccounting officers (CC Act) Independent accounting professionals (Co Act) Independent reviewer (Co Act)

4. Co-operatives – regulatory scheme Prefer same schemes for company, close corporation and co-operative in terms of accounting and assurance Bill Category A – annual accounting report Category B – independent reviewer’s annual accounting report Category C – auditor’s annual accounting report

5. Co-operatives - accounting Definitions Annual accounting report – defined as financial statements, social report and management report Financial statements Statement of financial position (balance sheet) Statement of comprehensive income (income statement) Statement of changes in equity Statement of cashflows Notes Management report and social report not defined

6. Co-operatives - accounting Minister must publish within 3 months after commencement publish a cooperative reporting system framework Difficult, if framework not published then no framework exist and no audit or review could be done on annual financial statements using the framework In some instances can use frameworks prescribed by Financial Reporting Standards Council if prescribed in Co-operatives Act Category A co-operatives might only use an annual return, compilation of financial statements, social and management reports more onerous than for small private companies

7. Co-operatives - assurance Auditors annual accounting report – annual accounting report examined and evaluated by auditor - no such report Auditor provides an audit report, based on prescribed framework Independent reviewer’s annual accounting report - annual accounting report examined and evaluated by independent reviewer – no such report Independent reviewer’s report, based on prescribed framework Refer to Companies Act – audit report & independent review report

8. Co-operatives - assurance Definitions: Audit – not same as Auditing Professions Act Independent review – not same as Companies Act Independent reviewer - means a person registered with an accredited professional body contemplated in Chapter III of the Auditing Profession Act, who does not have a personal financial interest in the co-operative or a related or inter-related co-operative. More restrictive than Companies Act Possibly allow members of other professional bodies Definitions already exists in other laws – to have other definitions would confuse the public, members and people identified to perform the functions.

9. Companies Act vs Co-Operatives Amendment Co PIS>350 audit 100>PIS<350 Audit or Independent review PIS<100 IR or compilation (if owner-managed) Co-op Revenue>X audit Y>Revenue<X independent review Revenue<Y compilation

10. Co-operatives - assurance Categories of primary co-operatives: Minister must prescribe monetary threshold for revenue (looking back) or projected annual revenue (forward looking) Revenue not defined Is this sufficient to identify “public interest”?

11. Every employee – average number Every R1m turnover Every R1m 3 rd party liabilities Every beneficial interest holder 1 Point 11 Companies Act – Public Interest Score

12. Co-operatives – other Consideration of audited or independent reviewed financial statements – AGM chairperson accepts report Not possible as auditor / IR prepares report. Co-op cannot decide to accept or not Annual Financial Statements and audit / independent review report must be presented at AGM Governance principles – not identified, in SA KING III recognised principles, too onerous for many co-operatives Co-operatives must retain records for 7 years, thereafter must archive – more onerous than Companies Act

13. Co-operatives – conclusion Separate accounting and assurance, allow for exemption for certain categories of co-operatives Use of terminology as per Companies Act, 2008 where possible Do not have more onerous requirements for co-operatives than companies Use of accounting frameworks as per Financial Reporting Standards Council, where possible

14. Thank you