Two things decide it: your public interest score, and whether the financial statements were compiled internally or independently. A score of 350 or more means an audit. Between 100 and 349, internally compiled statements mean an audit and independently compiled ones mean a review. Below 100, an independent review generally applies — unless the statements were internally compiled and every shareholder is also a director, in which case neither is required.
That last exemption is where most owner-managed South African companies sit, and one passive shareholder destroys it.
The two questions
1. What is your public interest score?
Four components, added together for the financial year:
| Component | Points |
|---|---|
| Turnover | 1 per R1 million, or part thereof |
| Employees | 1 per employee, average for the year |
| Third-party liabilities | 1 per R1 million, or part thereof, at year end |
| Beneficial interest in shares | 1 per individual holding one |
Headcount dominates for most SMEs. A labour-intensive business with modest turnover scores far higher than a high-margin consultancy on the same revenue. Growing the team is the fastest route across a threshold.
Shareholder loans count as third-party liabilities, which surprises owner-funded companies.
See what is the public interest score.
2. Who compiled the statements?
Internally compiled — prepared by the company or someone in it.
Independently compiled — prepared by an independent person qualified to do so, who is not involved in the day-to-day running of the business.
Between a score of 100 and 349 this single question decides audit or review, which makes it a genuinely consequential choice rather than an administrative detail.
What applies to you
| Public interest score | Internally compiled | Independently compiled |
|---|---|---|
| 350 or more | Audit | Audit |
| 100 – 349 | Audit | Independent review |
| Below 100 | Neither, if every shareholder is also a director<br>Otherwise: independent review | Independent review |
Separately, regardless of score: a company holding assets in a fiduciary capacity for others above the prescribed amount must be audited, and your MOI can voluntarily require an audit even where the law does not. Check the MOI — a customised one adopted at incorporation sometimes imposes an audit nobody remembers agreeing to.
The exemption most owner-managed companies rely on
Score below 100, statements compiled internally, every shareholder also a director → neither an audit nor an independent review.
Two founders who are both shareholders and both directors, with the books done in-house or by their accountant as part of the compilation, need neither.
"Every shareholder" means every one. A family member holding 5%, who has never been a director, defeats it entirely.
This is a real and frequently overlooked cost of taking on a passive investor. Someone puts money in for a small stake, takes no board seat, and the company acquires an independent review obligation it did not have the week before. Model that cost into the raise — it is a recurring annual expense, not a one-off.
See what is the Financial Accountability Supplement.
What the difference actually is
| Independent review | Audit | |
|---|---|---|
| Nature of work | Enquiry and analytical procedures | Testing, verification, third-party confirmation |
| Assurance given | Limited — nothing came to attention suggesting material misstatement | Reasonable — a positive opinion that the statements fairly present |
| Who may perform it | A registered auditor or a qualifying professional accountant | A registered auditor only |
| Cost | Lower | Substantially higher |
| Time | Weeks | Longer, with more of your time consumed |
The distinction is the form of the conclusion. A review says nothing came to our attention. An audit says, positively, that the statements fairly present the position.
Cost is not the only difference. An audit consumes management time — document requests, explanations, stock counts, confirmations. Budget the disruption alongside the fee.
When to do one voluntarily
Even where nothing is required.
A bank or funder asks for it. Some lending terms specify audited or reviewed statements, and the covenant matters more than the Act.
An investor requires it, as a condition of investment or in the shareholders' agreement.
You are preparing to sell. Two or three years of audited or reviewed statements materially improve a buyer's confidence and reduce the discount for uncertainty.
A tender or large customer requires it.
Shareholders who are not directors want independent comfort — often the same people whose presence removed your exemption anyway.
Where none of these apply, doing it voluntarily is spending money for no return. An audit does not make the numbers better. It gives assurance to people who need assurance, and if nobody needs it, nobody benefits.
Managing the threshold
Calculate your public interest score every year as part of preparing the accounts, and write it in the file. Ten minutes, and it tells you what your obligations are.
Project it forward. At 80 and hiring 25 people next year, you will cross 100 and your obligations change. Budget for it before it happens.
Understand the interaction before restructuring or raising. A passive shareholder removes the exemption. A holding company affects Small Business Corporation status. These interact, and they are cheaper to model than to discover. See what is a holding company and does your SME need one.
Do not manipulate the score. Deferring hires or restructuring liabilities to stay under a threshold is optimising the wrong variable — the compliance saving is small relative to the business decision.
Frequently asked questions
Does my company need an audit or an independent review? It depends on your public interest score and who compiled the statements. A score of 350 or more requires an audit. Between 100 and 349, internally compiled statements require an audit and independently compiled ones a review. Below 100, a review generally applies unless statements were internally compiled and every shareholder is also a director.
What is the difference between an audit and an independent review? An audit involves testing and verification and gives reasonable assurance through a positive opinion that the statements fairly present the position. A review involves enquiry and analytical procedures and gives limited assurance that nothing came to attention suggesting material misstatement.
Can a small company avoid both an audit and a review? Yes, where the public interest score is below 100, the statements were internally compiled, and every shareholder is also a director. This is where most owner-managed companies sit.
Does taking on an investor change my audit requirement? It can. The exemption from both audit and review depends on every shareholder also being a director. A passive investor who takes no board seat removes it, creating a recurring annual cost that should be modelled into the raise.
Who can perform an independent review? A registered auditor or a qualifying professional accountant. An audit may only be performed by a registered auditor.
Do shareholder loans affect my public interest score? Yes. Director and shareholder loan accounts are third-party liabilities and count at one point per R1 million or part thereof, so owner-funded companies often score higher than expected.
Should I get an audit voluntarily? Only if someone needs the assurance — a bank, an investor, a buyer, a tender, or non-director shareholders. An audit does not improve the numbers. Where nobody requires it, it is cost without return.
Work out the score, then the obligation
Most companies discover their reporting obligation when the accountant mentions it, in the year it changed. It is a ten-minute calculation that can be done a year ahead.
Smartbook calculates and tracks the public interest score, prepares the annual financial statements, and tells you a year in advance when growth is about to change what is required.
Last reviewed: 31 July 2026. Written by the Smartbook team — SAIPA and SAICA accredited, SARS registered tax practitioners. Audit and independent review requirements are set by the Companies Act 71 of 2008 and its Regulations and change from time to time — confirm your specific position before relying on this. General guidance, not advice on your circumstances.
Primary sources: Companies Act 71 of 2008 and Companies Regulations 2011 · CIPC · IRBA · SAICA