Directors Must Disclose Their Remuneration

There has been significant debate recently as to whether or not companies undergoing  voluntary audits are required to comply with Section 30(4), being the duty to disclose all remuneration and benefits received by each director in the Annual Financial Statements.
 
The Commissioner: Companies & Intellectual Property Commission (CIPC) issued a notice on 15 October 2018 confirming their position as follows:

  • A voluntary audit is one which is not compelled or mandated by law. It is  exercised by choice. Despite being voluntary, once an audit is undertaken, it is required to adhere to strict processes and criteria to ensure the integrity of audits as a whole, and a high level of assurance to stakeholders.
  • All the basic criteria for an audit are laid out in The Companies Act. Deviations from these criteria would “greatly compromise the integrity and high standard of an audit”.
  • The Companies Act is explicit in terms of audit requirements and criteria, and includes that “… the annual financial statements of each company that is required in terms of this Act to have its annual financial statements audited, must include particulars showing (a) the remuneration, as defined in subsection (6) and benefits received by each director, or individual holding any prescribed office in the company.  Subsections 4 (b) through to (e) also state specifically all other amounts relative to a director that might be disclosed in the audited annual financial statements.”
  • All entities which file audited annual financial statements, regardless of it being mandatory or voluntary, must disclose directors’ remuneration, as prescribed in Section 30 (4).
  • By not adhering to all the requirements in respect of an audit would be tantamount to a contravention of The Companies Act.

To assess the impact of this on your company, please contact your audit partner for more information.