Important
This guide explains public information and practical record-keeping workflows. It is not personal tax, accounting or legal advice, and eScripts is not SARS or CIPC.
What are Annual Financial Statements?
Annual Financial Statements summarise a company's financial position and performance for a financial year. They are built from the accounting records and typically include statements such as the income statement and balance sheet together with notes and other information required by the applicable reporting framework.
The exact form, reporting framework, level of assurance and filing requirement depend on the entity and its circumstances. A software-generated report is not automatically an audited or independently reviewed financial statement.
What SARS says about AFS and the ITR14
SARS' current company-income-tax guidance says signed supporting Annual Financial Statements are compulsory for Small Businesses and Medium to Large Businesses in the circumstances described in the ITR14 guidance. SARS also identifies minimum financial-statement content including an Income Statement, Balance Sheet and notes.
SARS pages are not perfectly identical in wording: one SARS FAQ specifically describes compulsory AFS attachment for a first-time ITR14 submission for Small Business or Medium to Large Business classifications, while the newer company-return guide uses broader compulsory wording. The safest approach is to follow the current ITR14 requirements presented for the company's classification and confirm the latest SARS guide before submission.
- Check the company's classification in the ITR14
- Use the current SARS ITR14 guide, not an old checklist
- Confirm whether signed AFS are required for that submission
- Retain the supporting schedules and documents behind the figures
Minimum AFS content SARS highlights
SARS' published ITR14 material identifies core statements that need to be available in the AFS support for relevant companies. Current guidance consistently refers to the Income Statement, Balance Sheet and notes, while one SARS FAQ also refers to a Tax Computation.
A tax computation is not the same thing as the accounting profit in the income statement. The tax calculation adjusts the accounting result for tax rules, allowances, disallowances and other tax-specific items.
- Income Statement
- Balance Sheet
- Notes to the Annual Financial Statements
- Tax computation where required by the applicable SARS guidance or return workflow
CIPC has separate financial-statement and assurance requirements
CIPC's financial-statements guidance explains that some private and personal-liability companies are required to have their Annual Financial Statements audited, while others may be subject to independent review depending on the Companies Act, regulations, the company's ownership/management circumstances and its Public Interest Score.
CIPC also links annual-return filing to either Annual Financial Statements or a Financial Accountability Supplement, depending on the entity's requirements and filing position. Do not assume that a SARS attachment automatically satisfies the CIPC process, or vice versa.
When CIPC says an audit may be compulsory
CIPC's public guidance identifies several situations in which a private or personal-liability company must have its Annual Financial Statements audited. These include certain fiduciary-asset situations and Public Interest Score thresholds that differ depending on whether the financial statements are compiled internally or by an independent party.
CIPC currently states that an internally compiled set of financial statements can trigger an audit at a PIS of 100 or more, while independently compiled statements can trigger an audit at a PIS of 350 or more. It also identifies a fiduciary-asset threshold of more than R5 million in the ordinary course of primary activities.
- Do not use the PIS threshold without checking how the statements were compiled
- Check whether the company holds qualifying fiduciary assets
- Check the Memorandum of Incorporation for additional audit requirements
- A company can also choose a voluntary audit
Independent review is different from an audit
CIPC explains that companies not requiring an audit may still be subject to independent review, unless an exemption or other rule applies. The eligibility of the reviewer can also depend on the company's Public Interest Score.
An independent review provides a different level and form of assurance from an audit. A set of accounts prepared by software or by management must not be labelled 'reviewed' or 'audited' unless the required professional engagement and sign-off actually occurred.
The AFS process starts with clean bookkeeping and reconciliations
Year-end financial statements are only as reliable as the records behind them. Before AFS preparation, the business should have complete source documents, reconciled bank accounts, reviewed debtors and creditors, updated fixed-asset records, loan balances, tax schedules and explanations for unusual transactions.
That is why the most efficient AFS workflow begins months before year-end. Monthly bookkeeping, bank reconciliation and supporting-document discipline reduce the amount of clean-up required before the financial statements can be prepared.
- Complete and reconcile bank accounts
- Review customer and supplier balances
- Reconcile loans, assets, equity and tax accounts
- Resolve suspense or unexplained transactions
- Prepare year-end schedules and comparatives
- Then prepare, review and sign the AFS at the appropriate professional level
What accounting software can do — and what still needs professional judgement
Accounting software can maintain a double-entry ledger, reconcile bank activity, produce Trial Balance and General Ledger reports, generate draft financial statements and organise schedules. It can also make collaboration between the business and the professional preparer more efficient.
It cannot turn draft statements into audited or independently reviewed statements by itself. Those labels depend on the applicable legal requirements and the work and sign-off of appropriately qualified professionals.
Put this into practice
Build the accounting foundation before the year-end rush.
eScripts Financials connects source records, double-entry accounting, bank reconciliation, reports, year-end schedules and AFS/PIS readiness with professional collaboration.
Frequently asked questions
Does every South African company have to submit AFS to SARS with every ITR14?
The requirement depends on the company's classification and the current ITR14 workflow. SARS guidance uses different wording across pages, so check the current ITR14 guide and the actual return requirements for the company before submitting.
What minimum AFS information does SARS refer to?
Current SARS company-return guidance refers to an Income Statement, Balance Sheet and notes for relevant AFS submissions. Some SARS material also refers to the tax computation.
Does every private company need an audit?
No. CIPC identifies specific audit triggers, including Public Interest Score thresholds and certain fiduciary-asset circumstances. The company's MOI can also require an audit, and a company may elect a voluntary audit.
What is the difference between an audit and an independent review?
They are different assurance engagements with different requirements and levels of assurance. Whether one is required depends on the Companies Act, regulations and the company's circumstances.
Can eScripts Financials prepare audited AFS automatically?
No. eScripts Financials can support the accounting, reconciliation, schedules, draft reporting and collaboration workflow. A professional audit, independent review or compilation remains a separate professional engagement where required.
Official sources used for this guide
Rules can change. Follow the official source for the latest version and use professional advice where your facts are complex.