It is not uncommon, for a number of reasons, for companies to fail in this regard. However, failure to comply with this requirement is a breach of the Companies Act and can have a number of dire consequences.When preparing an Audit or Independent Review opinion the auditor needs to consider this breach (defined as an unlawful act or omission) and whether it constitutes a Reportable Irregularity in terms of the Auditing Profession Act. Although not all breaches of this section result in a Reportable Irregularity, there are circumstances that the auditor is obliged to report. Receiving a Reportable Irregularity can have serious implications for a business. In the event that it is not a Reportable Irregularity, the auditors is still required to consider and document such, resulting in additional audit time required.
It is therefore encouraged to ensure that the Companies Act requirement is adhered to and the 6 month deadline met.
Examples of when failure to prepared Annual Financial Statements within 6 months could result in a Reportable irregularity:
We therefore urge you to be mindful of this deadline and communicate with us if you feel that your financial statements will not be finalised by the due date.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)