Dear clients, colleagues and service providers
As we look to a new business week, so too we look to the implications of operating under level 4 lockdown restrictions. Some practical guidance is included in the article Lockdown Restrictions Level 4.
Strategic Business Support has made a decision that we will continue to operate remotely for the foreseeable future. The South African Institute of Chartered Accountants has advised us that in view of the severe sanctions for non-compliance with the regulations, we should take a strict interpretation to ensure compliance. They have also encouraged us to support government’s efforts to limit the spread of Covid-19.
As stated in our advisory note of 23 March 2020, this is not business as usual and we need to work in partnership with you in assessing priorities for work. Our team has done an exceptional job in extremely difficult circumstances to continue providing core services. If you have any concern about priorities that need attention from us, I encourage you to reach out to a member of our team, or to Clive or myself. Our priority ranking is presently as follows (slightly amended from 23 March):
- Assisting businesses in navigating these unchartered waters, providing information on relief initiatives and offering advice and support with a particular focus on ensuring business survival and success.
- Processing and payment of payrolls and other front line payments that affect individual human beings. We have a duty of care to yourselves and your employees to ensure that people receive their salaries and benefits on due dates. This includes assistance with UIF benefits in terms of the Temporary Employer/Employee Relief Scheme (TERS).
- Accounting tasks that support business cash flow, such as processing of invoices and generation of debtor statements.
- Statutory compliance, including Value Added Tax and Employees tax returns.
- Ongoing monthly accounting services, including processing of records and preparation of management accounts.
- Annual financial statements, preparation for audits and engagement with auditors.
We previously noted that the annual financial statement process was likely to experience some level of delay. Although we are making progress there are practical challenges, such as the need for scanning of documents. A further issue is that some of the documents that the auditors need to inspect are under lockdown, either at our premises or those of our clients. There is presently no provision in the regulations to allow for access to those documents.
For the vast majority of clients, the annual financial statement process is a formality and deadlines will largely be driven by tax return deadlines. In practice, there is also a Companies Act requirement that financial statements be prepared within 6 months of the financial year end and we hope that this deadline will be extended given some of the practical issues noted above. There are other clients for whom the financial statement deadline becomes critical, and we request that those clients please engage with us on setting a realistic timetable, noting that we also need to engage with various audit service providers. We flag two specific areas of concern:
- Businesses that have bank facilities where the covenants require submission of annual financial statements within a defined period after year end: We recommend that those clients contact the financial institutions to request extension of those deadlines.
- Entities that have Annual General Meeting and/or audit committee requirements: It is essential that these clients engage with us before setting the dates for those meetings.
We thank you for your understanding during this difficult time and once again assure you of our commitment to partnering with you as we establish a new normal.