Straight answers

Any accounting practice may prepare them, but group consolidation is specialised work that not every practice takes on. HTCO Group has prepared consolidated annual financial statements since 2004 and does this work in-house: eliminations, non-controlling interests, foreign subsidiaries and multi-tier group structures.

If your company controls one or more other companies, IFRS 10 requires consolidated financial statements. The exemption most groups ask about applies only when every condition is met: the company is itself a subsidiary and its other owners do not object, its shares and debt are not publicly traded, it is not filing statements with a regulator for the purpose of issuing instruments publicly, and an ultimate or intermediate parent already publishes IFRS consolidated statements available for public use. Control is also not the same as a majority shareholding — it can exist below 50% and be absent above it — so borderline cases are worth an opinion before year end rather than after.

IFRS for SMEs is a shorter, simplified framework for companies without public accountability, with far less disclosure than full IFRS. The differences that show up in practice: goodwill and other indefinite-life intangibles are amortised rather than tested for impairment annually, borrowing costs and development costs are expensed rather than capitalised, investment property moves to cost accounting once fair value can no longer be measured reliably without undue cost, financial instruments follow two simpler sections instead of IFRS 9, and there is no requirement to present a segment note or earnings per share. In South Africa the Companies Act regulations determine which framework a company may use, from its public interest score and whether it is publicly accountable. We work in both, and in UK GAAP for UK subsidiaries.

The portion of a subsidiary's equity and results belonging to shareholders other than the group. When a parent controls but does not wholly own a subsidiary, the whole subsidiary is consolidated line by line, and the outside shareholders' share is presented separately within group equity and in the statement of profit or loss.

Yes — that is the usual arrangement. Send us a trial balance per entity. We map the accounts once, carry that mapping forward year to year, consolidate, and produce the statements, the notes, the accounting policies and an audit-ready working paper pack.

A trial balance alone is not enough for the notes, and that is worth knowing before you start. It gives balances; the disclosure needs movements and terms. So we also ask for the reconciliations and schedules behind the figures it cannot show: the fixed asset register with additions, disposals and depreciation; receivable and payable ageing; lease schedules; loan agreements and repayment terms; the movement in provisions; related-party balances and transactions; share capital movements; and the deferred tax computation.

Where those do not exist in a usable form we can build them — that is what our reconciliation work is — and we will say so upfront rather than discover it at year end. Our own software, AFSStudio, is built so a finance team can do that part themselves: the reconciliations are capture screens, and what you capture becomes the disclosure note.

It is translated under IAS 21 before consolidation. Assets and liabilities go at the closing rate. Equity stays at the historic rates at which it arose. Income and expenses are translated at the rates on the dates of the transactions — although IAS 21 allows an average rate for the period as a practical approximation, which is what most groups use, and that concession falls away if rates have moved sharply during the year.

The resulting difference is not a gain or a loss in profit. It goes to other comprehensive income and accumulates in a separate component of equity, the foreign currency translation reserve. It stays there for as long as the subsidiary is held.

On disposal of the subsidiary, the amount accumulated in that reserve for it is reclassified from equity to profit or loss, as part of the gain or loss on disposal. Groups that have held a foreign subsidiary for years are sometimes surprised by the size of it. We handle the translation, the reserve and the recycling as part of the consolidation.

Yes. Prior-year restatements, comparative corrections and first-time adoption of IFRS (IFRS 1) are regular work, and each is disclosed as the standards require rather than quietly absorbed into the current year.

What governs it is IAS 8, and the distinction it draws decides the treatment. A change in accounting policy and a prior-period error are both applied retrospectively: the comparatives are restated as though the new policy had always applied, or as though the error had never happened. A change in accounting estimate is not — it is applied from the current period forward. Whether something is an error or a revised estimate is therefore the first question, and it is not always comfortable to answer.

A retrospective restatement also brings a third statement of financial position, at the beginning of the earliest comparative period presented, with the nature of the change and the effect on each line item disclosed. Your auditor will ask how the misstatement arose and why it was not caught, so we document that at the time rather than reconstruct it later.

No. We prepare financial statements; we do not audit them. In South Africa an audit may only be performed by a registered auditor, and preparing and auditing the same set would compromise that auditor's independence.

What we do instead is make the audit straightforward: your auditor gets a cross-referenced working paper pack, and we answer their queries directly rather than passing them back to you. If you do not have an auditor appointed and need one, tell us and we will point you to firms we work with regularly — the choice stays yours, and we take nothing for the introduction.

We do perform independent reviews, which are a different engagement from an audit and are what many companies below the audit threshold require. The same independence principle applies: we review the statements of companies we did not prepare.

Yes. An independent review is a different engagement from an audit — a lower level of assurance, performed under ISRE 2400 — and it is what many companies below the audit threshold need to satisfy the Companies Act.

Whether your company needs an audit, an independent review or neither turns on its public interest score, whether its statements were independently compiled, and what its Memorandum of Incorporation says. If you are not sure which applies, ask before year end; it changes who may sign and how long the work takes.

We review the financial statements of companies we did not prepare. Where we prepared them, the review has to go to someone else, for the same independence reason an audit would.

Yes, and that is the normal arrangement. It works the same whether you have a full finance department, one bookkeeper, or nobody in particular — we take the reporting, and we liaise with your auditor through to sign-off. If you do not have an auditor and need one, we will tell you so rather than leave you to find out at filing.

We are in Block D, Stoneridge Office Park, Modderfontein, and we work with groups across South Africa. Trial balances, queries and drafts move electronically, so distance rarely matters; we visit when the work calls for it.

iXBRL is a file that is readable by both a person and a machine. The "i" is for inline: it is an XHTML file that opens in a browser and looks like the financial statements, with each figure tagged underneath to a defined element so software can extract it. CIPC requires qualifying companies to submit their annual financial statements this way with the annual return, instead of as a PDF, so the data can be analysed rather than merely stored.

The tagged figures must agree to the set that was signed. Tagging is not re-keying, and the usual failure is a file that no longer matches the statements it came from. CIPC validates the file on submission and rejects what does not pass, so a rejection is found at filing rather than afterwards.

TagXBRL, our own iXBRL tool

Companies required to have their annual financial statements audited, and those that elect to file them, must submit in iXBRL with the annual return. Companies that are not required to file financial statements submit a financial accountability supplement instead. Whether your company qualifies depends on its public interest score and its Memorandum of Incorporation, so check before the annual return falls due.

Yes. CIPC annual returns, beneficial ownership filings and the iXBRL statement filing are part of our secretarial work, and the figures are tagged from the same mapping that produced the statements rather than re-keyed into a portal.

Two obligations get confused here, and they are separate. The annual return is a filing every company must make each year, due within 30 business days of the anniversary of its incorporation. The financial statements are a second filing, in iXBRL, made with it by the companies that qualify. Missing the first does not merely attract a penalty: CIPC may begin deregistration proceedings, and a deregistered company cannot contract, bank or sue until it is restored.

Beneficial ownership is now filed alongside the annual return, and it catches companies out because it is comparatively recent. The register must be kept up to date and filed, and a change in who ultimately owns or controls the company has to be reported rather than left until the next return.

A number every company calculates each year under the Companies Act regulations. It decides whether the company must be audited or independently reviewed, and which reporting framework it may use.

It is a simple total of four things, for the financial year: one point for every employee, averaged over the year; one point for every R1 million (or part thereof) of turnover; one point for every R1 million (or part thereof) of third-party liability at year end; and one point for every individual who directly or indirectly holds a beneficial interest in the company's issued securities.

A score of 350 or more means an audit. Between 100 and 349 it depends on who compiled the statements: an audit if they were compiled internally, an independent review if they were independently compiled. Below 100 an independent review will usually do, unless the company's Memorandum of Incorporation or another requirement calls for an audit. Because the score moves with turnover and headcount, a company can cross a threshold without anyone noticing until the year it matters.

The monthly cycle end to end — payslips, PAYE, UIF and SDL, and the EMP201 submitted and paid by the 7th of the following month — plus the interim and annual EMP501 reconciliations with IRP5 and IT3(a) certificates. Engagements, terminations and leave balances are maintained as they happen rather than reconstructed at year end.

We claim the Employment Tax Incentive where it applies. It is real money for employers of younger, lower-paid staff and it is routinely left unclaimed, usually because nobody looked rather than because the company did not qualify.

The part that matters for the statements: we reconcile payroll to the general ledger, so the wage cost in the annual financial statements agrees to what was submitted to SARS. A payroll that does not tie to the ledger is found by the auditor, and by then it is a year old.

Either. If you have a tax department, send us the computation and we agree it into the set. If you do not, we prepare it. What matters is that one number ends up in both places.

Deferred tax is worked out from the balance sheet, not from the tax return: it comes from the temporary differences between what an asset or liability is carried at and its tax base. We compute it that way so it agrees to the statements rather than sitting beside them.

The tax note then reconciles the effective rate to the statutory rate, and that reconciliation is what exposes anything unresolved: a permanent difference nobody recorded, an assessed loss without a recognised asset, a prior-year adjustment left dangling. The income tax expense in the statements has to agree to the ITR14 eventually, so a disagreement now is a SARS query later.

Yes — provisional and annual returns, VAT and PAYE compliance, and objections, disputes and verifications when something goes wrong.