Mrl2601 exam

Mrl2601 exam Question 5  Close corporations are not exempted from financial reporting. An annual financial statement must be drawn up.  The annual financial statement must be approved by or on behalf of members holding at least 51% of the member’s interest in the close corporation. A report must be drawn up by the appointed accounting officer.  In terms of section 58(2A), section 30(2)(b), and (3) to (6) of the Companies Act 71 of 2008, apply to a corporation that is required by the regulations made in terms of section 30(7) of the Companies Act, to have its annual financial statements audited.  A close corporation will thus be compelled to have its financial statements audited in the same circumstances as a private company. An annual financial statement must be drawn up.  A close corporation need not, in terms of the Close Corporations Act, appoint an auditor. However, an accounting officer must be appointed who must account in conformity with generally accepted accounting practice. He or she also plays a very important reporting function.  If an accounting officer becomes aware of irregularities in the accounting policies or practices within the corporation, this must be disclosed to the members. The Registrar must also be informed should the accounting officer be removed, if the corporation is not carrying on business, or if its liabilities exceed the assets at the end of the financial year.  Accounting records must be kept and approved by members holding at least 51% of the member’s interest in the close corporation annually. The accounting records need not be submitted to the Registrar. A report must be drawn up by the appointed accounting officer. Question 6 6.1Plasket J 6.2Close Corporation