Every year, South African company owners get asked for their "AFS" — by SARS, by the bank, by an investor or a tender. If you're not sure exactly what Annual Financial Statements are, whether your business legally needs them, and whether they have to be audited, this guide explains it in plain language.

The short answer: Every company registered under the Companies Act (including a small (Pty) Ltd) must prepare Annual Financial Statements within 6 months of its financial year-end. Whether they must also be audited or independently reviewed depends on your company's Public Interest Score. Many small, owner-managed companies only need compiled AFS — no audit or review.

What are Annual Financial Statements?

Annual Financial Statements (AFS) are the formal, year-end report of a company's finances, prepared to a recognised accounting standard — in South Africa, usually the IFRS for SMEs standard. They tell the official story of how the business performed over the year and what it's worth at year-end. They're different from your day-to-day bookkeeping and from your tax return: think of the AFS as the polished annual summary that everyone else relies on.

The five parts of a set of AFS

A complete set of AFS under IFRS for SMEs is made up of five components:

  1. Statement of Financial Position (the balance sheet) — what the company owns and owes at year-end.
  2. Statement of Comprehensive Income (profit & loss) — income, expenses and profit for the year.
  3. Statement of Changes in Equity — how the owners' stake moved over the year.
  4. Statement of Cash Flows — where cash actually came from and went.
  5. Notes & accounting policies — the explanations and disclosures behind the numbers.

A South African set usually also carries a cover page, a directors' responsibility statement and, where required, an independent reviewer's or auditor's report.

Does my (Pty) Ltd legally need them?

Yes. Under the Companies Act 71 of 2008, every company must prepare AFS each year, within six months of its financial year-end. That applies to a small private company just as much as a large one. The real question for most owners isn't "must I prepare them?" (you must) — it's "do mine have to be audited or reviewed?"

Audit, independent review, or just compiled?

This is decided mainly by your Public Interest Score (PIS) — a points score based on your turnover, number of employees, third-party liabilities and number of shareholders. Broadly:

  • Audit required — for public/state-owned companies, companies that hold assets in trust above a threshold, or a higher Public Interest Score.
  • Independent review — for many mid-range companies that don't trigger an audit.
  • Compiled only (no audit or review) — typically available to small, owner-managed companies (where every shareholder is also a director) with a low Public Interest Score.

The exact thresholds are set out in the Companies Regulations and the cut-offs matter, so confirm your category with an accountant — but the key point is that preparing AFS is always required; an audit often is not.

AFS vs management accounts vs your tax return

  • Management accounts — informal monthly/quarterly numbers you use to run the business. Not a legal filing.
  • Annual Financial Statements — the formal year-end statements to IFRS for SMEs, required by the Companies Act.
  • Company tax return (ITR14) — submitted to SARS, and built from your AFS. You generally need the AFS done first.

Why they matter (beyond ticking a box)

  • SARS — your ITR14 is based on them.
  • Banks & lenders — they'll ask for AFS before approving finance.
  • Investors & buyers — due diligence starts with your AFS.
  • Tenders & BEE — many require recent AFS.

BooksXperts produces compliant AFS straight from your books

This is exactly what BooksXperts is built for: do your bookkeeping in one place, then generate a full set of IFRS-for-SMEs Annual Financial Statements — balance sheet, income statement, changes in equity, cash flows and notes — without exporting to a separate system. Need it signed off? Find a professional in our accountant marketplace.

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Frequently asked questions

Does a sole proprietor need Annual Financial Statements?

A sole proprietor isn't a company, so the Companies Act AFS rules don't apply in the same way. But you'll still need proper financial statements for your personal tax return and for any bank or lender — so the bookkeeping discipline is the same.

Does a dormant company still need AFS?

Generally yes — a registered company is expected to prepare AFS even in a dormant year, though the statements will be simple. Check your specific obligations with an accountant.

Who can sign off or prepare my AFS?

The directors are responsible for the AFS. Depending on your audit/review category, they may need to be reviewed by an independent reviewer or audited by a registered auditor. Compiled AFS are often prepared by an accounting officer or accountant.

When are they due?

Within six months of your company's financial year-end, under the Companies Act.

New here? You might also like our guide on how much bookkeeping costs in South Africa.

This article is general information, not legal, tax or accounting advice. The requirements for audits, reviews and Public Interest Score thresholds are set out in the Companies Act 71 of 2008 and its Regulations and can change — confirm your company's specific obligations with a qualified accountant or auditor.