How to calculate your Public Interest Score to see if you can skip a financial audit!
In this issue:
- What is your PI Score?
- How do you calculate your PI score?
The Companies Act 2008 has been in effect for a little over a year now. But many of our readers are still confused about how to calculate their company’s Public Interest Score (PI Score), and what it has to do with financial audits or reviews.
What is your PI Score?
Your PI Score shows you how much responsibility your company has to the public. For example, a hospital will have a higher PI Score than a dress boutique will have.
Your PI Score determines if your company still needs a financial audit, can have an independent review or needs nothing at all.
Let’s recap how you must calculate your PI Score.
How do you calculate your PI score?
Your company gets one point for every:
- Shareholder or partner you have;
- Staff member;
Anthony Small has been running a construction business, Anthony Civils Pty (Ltd), for the past seven years. He knows that under the Companies Act he’s got to work out his PI Score.
- Eight shareholders;
- 100 staff members;
- A R100 million annual turnover;
- No outside debt.
Anthony’s PIS score will be:
8 + 100 + 100 + 0 = 208
If you’ve had a high staff turnover in one year, don’t worry – you won’t get a high PI Score! When you calculate your PI Score, look at the average number of staff members you have over the year and allocate yourself points according to this average number.
For example, if in one year you have 60 staff members but 30 of these people resigned, and you had to replace them, you won’t get 90 points (1 point for every staff member you had over the year). You’ll get 7.5 points because you had 90 employees over 12 months (90/12).
- R1 million of turnover (or part thereof); and
- R1 million of outside debt.
If you company has a PI Score:
Over 350, you’ll still need an audit;
Between 100 and 350, you’ll need an independent review; and
Lower than 100 you won’t need an independent review or an audit (unless your Memorandum of Incorporation says otherwise).
Discover how to:
ü Improve your cash flow and eliminate simple accounting mistakes
ü Analyse your financial statements and identify costly errors
ü Be 100% up-to-date on new and updated accounting and reporting standards
Find out more…
Send us your tax questions!
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Source: Tax Bulletin – For more tax and VAT tips from some of SA’s top tax experts.
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