Compliance requirements for businesses are becoming more onerous.
Small businesses in particular increasingly have to perform a balancing act between optimising their limited resources on the one hand and weighing up the consequences of non-compliance on the other.
Now we are faced with new accounting reporting standards – standards you should both know about and prepare for. We’ll focus on one particularly important one, the “Revenue from Contracts with Customers” requirement.
Another crucial development is a recent CIPC warning about non-compliance with disclosure requirements relating to remuneration of directors and prescribed officers.
Small business has limited resources and optimising these resources is a balancing act. Part of this balancing act includes the role of compliance.
These requirements have increased as new laws are rolled out along with other regulations, such as BEE and FICA, which also need to be considered.
One needs to carefully weigh up the consequences of not complying with laws or regulations. It is no excuse to say “I was not aware of that requirement” – the onus is on the business to take the time to understand what it needs to know.
Be aware that new standards have become effective in 2019.
The most important of these is “Revenue from Contracts with Customers”. This could be depending on your business, fundamentally alter the way your company recognises revenue (such as construction and telecommunication industries) and even if it does not, disclosure requirements in the notes to your Annual Financial Statements (AFS) may change.
These notes will have knock-on effects, for example, to bonus schemes tied to sales which may need to be altered. This will affect how you disclose remuneration in the AFS and could in turn impact how much additional tax your staff need to pay. In turn, this will change your PAYE (Pay as You Earn) and will roll through to the EMP 201 and EMP 501 (monthly and annual earnings declarations to SARS).
This is only one of several new standards, so speak to us to assess the effect on your business.
Banks and other financial institutions rely on your AFS to determine the health of your business. Not complying with these standards could result in an audit qualification, in turn resulting in a negative perception of your business by key stakeholders.