Information on the new Companies and Intellectual Property Commission (CIPC) Compliance checklist

Preparing and signing off financial statements 6 months after year end and the new Companies and Intellectual Property Commission (CIPC) Compliance checklist.

Sadly, this is not a new issue and companies have not always adhered to the regulations as there hasn’t really been a way for the CIPC to pick this up. Until now.

From the 1st of January 2020 companies are required to complete and submit a compliance checklist when submitting their annual returns to CIPC. To submit a company’s annual duties return at CIPC, the person submitting the return is required to answer questions on a checklist to ensure and agree that the company adheres to the Companies Act and that the person submitting returns has both checked and confirmed this.

So it is important that we get this right for the company, its directors, and for those at Anlo who will be submitting the annual duties.

One of the questions on the return is whether the company has prepared financial statements 6 months after year end. 

There are a lot of requirements covering what makes up a set of financial statements and what needs to be included.  This is what we do best, so leave that with us to prepare and ensure compliance.

But what is most important is what will happen if you don’t prepare and finalise your financial statements within 6 months after year end.

When submitting your annual duties return at CIPC yearly, we will have to tick the ‘NO’ button which means the company has failed to comply with the Companies Act. That will have implications for the company and its directors as it is the directors who are responsible for complying with the Companies Act and its requirements.

This means the CIPC can apply Section 171 of the Companies Act and add a hefty penalty of 10% of the turnover for that year to companies that are non-compliant. If the company is required to be audited it is even more important for the directors and auditors that the company and its directors comply with the Companies Act. Failure to do so won’t just be the additional cost of the audit, it could be qualified accounts and a reportable irregularity. 

So, we have taken a company decision to make sure our clients are compliant and not in contravention of the Companies Act and put steps in place to help us, and you, achieve this.

We will request and pursue, if necessary, information from clients to ensure that accounting records are updated as soon as possible after year end. We need company directors to understand why we are asking for this information and to appreciate its importance.

If external documents are required from financial institutions, we will send a requirement list to our clients to ask them for the necessary documents as soon as possible. We have incorporated the necessary checklists in our working papers to ensure we are prepared for annual duties return submissions and that we have all the necessary documentation to submit the return as well as the compliance checklist.

We will ensure that directors and appropriate employees have access to the accounting records and ensure that they understand what is required and what makes up the accounting records of the company. This is also a requirement of the Companies Act and a question asked as part of the annual duties return compliance checklist to ensure adherence to the Act.

Because it is necessary to comply with the Companies Act and the CIPC requirements, we hope that clients understand that it is important and do what is required from their side to ensure compliance and help us, help them 😊The CIPC serves as the custodian of the Companies Act and their main objective is to promote compliance with the Companies Act. To have a registered company in South Africa the directors need to comply with the Companies Act, aka, CIPC requirements and notices.

There are several things that worry us with the implementation of this checklist, one of them being the cost involved to our clients to meet these requirements. We will try our best to streamline the process but the cost of submitting CIPC returns and compliance checklist will have to increase to ensure we can do the required work. Up until now it was as simple as inputting the turnover amount and click through to the end and the submission is done.

Now, we are required to answer truthfully Yes, No or N/A to questions that require in some instances additional work or collection of documents, and if necessary, to write to the CIPC and explain a company's situation if it’s non-compliant.

The point of this blog is to reassure clients that we will nurture and guide our clients and companies through compliance and to do our absolute best to make sure no-one gets into trouble.

If you would like to learn more about the questions and SAICA’s point of view on the CIPC checklist refer to this article.