Annual Financial Statement Services
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OVERVIEW
Financial statements are one of the most important annual reports for your company.
Annual financial statements provide users with quantitative data regarding specific aspects of the entity’s financial performance. Financial statements also include figures from the prior fiscal year for users to be able to compare performance and financial records over two years.
WHAT’S INCLUDED
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Why do you need Annual Financial Statements (AFS)?
Companies all need a set of Annual Financial Statements which tells a story of your company’s financial performance at a point in time (Statement of Financial Position) and also over time (Statement of Comprehensive Income) with historic information for comparison purposes.
Your country’s jurisdiction may require that AFS be drafted a few months after the end of your financial year. In South Africa, this deadline is set by the Companies Act to be 6 months after year-end. 6 Months may sound like a lot, but often year-end adjustments are only processed 2 to 3 months after year-end when final supplier statements are received, reconciled and provisions determined. That does not leave a lot of time for the drafting of the AFS to portray the numbers in a user-friendly format.
What happens after my AFS are compiled?
A set of AFS is also required to be submitted with your income tax return in support of the figures used to calculate your corporate tax. It is therefore very important to ensure that the AFS are correct and are prepared in time to meet not only the AFS deadline, but also the deadline to submit your income tax return.
For South African companies, this is 1 year after the financial year-end of your company.
Additional Companies Act requirements
In the spirit of compliance requirements, a common step that is often forgotten in this process is the resolutions that approve and accept the AFS by both directors and shareholders.
We will assist you in drafting these two standard resolutions to be circulated to your board and owner/s to sign.
The reason behind AFS
Financial statements are one of the tools that are used by business owners to plan, structure their operations, invest their funds and ultimately, grow their business. If you, as a business owner, are looking for funding, it is key for investors to access this important financial information to see the potential in your company by looking at the figures as it is set out in the AFS.
Investors are also more likely to invest in a company that is compliant with statutory requirements and has sound financial reporting. This is one of the important reasons to ensure that your company has AFS that are drafted timeously and accurately.
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FAQ
Frequently Asked Questions
What are Annual Financial Statements?
Annual Financial Statements (AFS) are yearly reports that present an entity’s financial performance. These reports are compiled based on the transactions from a financial year for every company.
A full set of AFS consists of the following reports:
- statement of financial position (balance sheet)
- statement of comprehensive income (income statement)
- statement of cash flows
- statement of changes in equity
- accounting policies
- notes to the financial statements
When should Annual Financial Statements be filed?
In terms of Section 30 of the Companies Act of South Africa, a company must prepare their Annual Financial Statements within six months after the end of its financial year.
How to prepare Annual Financial Statements?
AFS are prepared by grouping all transactions into different general ledger accounts. This grouping is also called the processing of transactions and can happen throughout the course of the financial year. The accounts that transactions are processed to are split between Income, Expenditure, Liabilities, Assets and Equity.
At financial year-end, the balances of assets and liabilities are carried over to a Balance Sheet, whereas the total of income and expenses are carried over to an Income Statement.
Equity will be the difference between assets and liabilities.
When is the financial year of South Africa?
A company that is registered in South Africa should have a 12-month financial year. The start and end date for a financial year is not set, but can differ depending on when a company is registered. Most companies in South Africa use 1 March – 28 February as their financial year, since this is also the financial year for individuals and trusts.
What are the costs related to the compilation of AFS?
The costs for a full set of AFS depends on the amount of work that needs to go into the compilation as well as the reporting framework used. Firstly, the number of transactions in the entity plays a role. Furthermore, if accurate bookkeeping has been done throughout the year, the accounting and compilation needed may be less time consuming than it would be for a company where no bookkeeping has been done.
Contact us for more information and a quote on your Annual Financial Statements.
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