The Companies and Intellectual Property Commission’s (CIPC) Corporate Compliance and Disclosure Regulation unit, as part of its functions per section 187(3) of the Companies Act 71 of 2008, covered various areas of enforcement during the past few months. These included qualitative reviews of annual financial statements submitted in iXBRL and proactive monitoring and enforcement of financial reporting contraventions.
ANNUAL FINANCIAL STATEMENTS REVIEW COMMITTEE (AFSRC) FINDINGS
Each quarter, the AFSRC presents its findings and consolidates them for further enforcement action and compliance monitoring. In the past three quarters of the year, the reviews revealed the following areas of non-compliance:
View graph – Areas of non-compliance
PROACTIVE ENFORCEMENT
- Public companies − 18 compliances notices were issued during the outgoing financial year to public companies that had contravened the Act by not meeting their financial reporting obligations in terms of section 33. One of the companies included a JSE-listed company, albeit suspended from trading.
- Onsite inspections − In pursuit of fostering better compliance by improving the culture of accountability by those charged with governance, the CIPC assigned inspectors to conduct onsite boardroom visits during February. The visits were aimed at verifying adherence to record keeping and the maintenance of accounting records in line with sections 24 and 25 of the Act as well as Regulation 23 of the Companies Regulation 2011. More onsite inspections will be conducted in the upcoming financial year.
Abridged recurring areas of non-compliance – summary
IN THE HORIZON
- Taxonomy gap analysis and stakeholder consultations −Engagements with industry, software vendors, professional bodies and the public will ensue from May up to the end of August to identify any gaps between the current taxonomy and the most recent and yet-to-be-implemented IFRS standards.
- Old taxonomy deprecation − With effect from 01 July 2023, the 2016 and 2019 taxonomy entry points will be deprecated. More information can be found here: Gazetted Notice No 3085.
- Updated taxonomy roll-out − Per past iterations, 01 October each year marks the roll-out of an updated taxonomy to remain abreast with financial reporting standards published by the International Accounting Standards Board. This ensures that companies are always able to report in alignment with the latest financial reporting standards.
OTHER REGULATORY DEVELOPMENTS
- XBRL International − Commissioner Advocate Rory Voller continues to serve as a member of the XBRL International board of directors. Attention is being given towards inter-regulator data sharing to enhance proactive regulation and unlock the value behind XBRL digital financial data.
- IFRS Taxonomy Consultative Group (ITCG) − South Africa continues to be represented in the ITCG by a CIPC staff member, Mr Cuma Zwane. The IFRS Foundation will renew all ITCG members’ tenures up until the end of August 2023 to allow the formation and finalisation of the Sustainability Accounting Standards Board (SASB) Taxonomy Consultative Group with the intention of bringing the two groups together.
- IRBA Public Interest Entity (PIE) Task Group − The CIPC was invited to be part of IRBA’s PIE Task Group and subsequently nominated two staff members to represent it. The staff are from the Corporate Governance Surveillance and Enforcement and Corporate Compliance and Disclosure Regulation units. The CIPC provided the required input to cover the Companies Act scope of issues pertaining to the objectives being pursued from an inter-regulator perspective.
STAKEHOLDER ENGAGEMENTS
Demand for further deliberations around the iXBRL financial reporting dynamics continues to grow, with companies and professional bodies requesting increased hand-holding and platforms to voice their challenges, seek clarity on matters of interpretation and improve their compliance. The CIPC is considering various options to engage industry more meaningfully and granularly to achieve its objectives while reducing the administrative pains of compliance.
The CIPC wishes to thank the Customer Liaison Committee (CLC) secretariat, professional bodies and their members and all participants for their valuable input and robust discussions over the past year. More effort will be exerted towards improving service delivery and the ease of doing business.
Authors
Hennie Viljoen, Senior Manager, Process Engineering, Business Intelligence and Systems Group, CIPC, and Cuma Zwane, Senior Investigator, Corporate Disclosure and Compliance Regulation, CIPC
