Strategic Advisory for Auditing Firms: SARS Filing Season & Financial Statement Finalisation

The months of June and July represent a pivotal period in the annual calendar of South African auditing firms. These weeks are marked by heightened activity as the South African Revenue Service (SARS) Individual Tax Filing Season commences, while many entities simultaneously conclude their financial reporting cycles. For auditing professionals, this dual-focus season demands strategic foresight, procedural rigour, and precision in execution.

This guide explores two critical operational pillars that auditing firms must expertly manage during this high-stakes season: preparation for the SARS Individual Tax Filing Season and the finalisation of Annual Financial Statements (AFS) and Independent Reviews.

Preparing for the SARS Individual Tax Filing Season

Timeline & Context

Each July, SARS launches its Individual Tax Filing Season, inviting salaried employees, provisional taxpayers, sole proprietors, and other individuals to submit their ITR12 income tax returns for the prior fiscal year (ending in February). For audit and tax professionals, the groundwork laid in June and early July is critical to ensuring timely, accurate submissions that uphold compliance standards.

Core Responsibilities for Auditing Firms

  1. Validation of Auto-Assessments

SARS continues to expand its auto-assessment programme by drawing from third-party data (e.g., IRP5s, bank statements, medical scheme contributions). Auditing firms are expected to:

  • Cross-check data against client records.
  • Identify taxpayers who should opt for manual submissions, especially where:
    • Deductions are excluded (travel claims, out-of-pocket medical costs).
    • There is supplementary income (rental, capital gains, offshore earnings).
    • Business or freelance income is present.
  1. Documentation Readiness

Efficient filing begins with meticulous documentation. Firms should assist clients in assembling:

  • IRP5s and IT3(b)/(c) certificates.
  • Proof of retirement annuity and medical aid contributions.
  • Rental and business income/expense ledgers.
  • Logbooks for vehicle-related deductions.
  • Capital gains breakdowns from property or unit trust sales.
  1. Strategic Client Communication

Clarity and education are paramount. Consider the following initiatives:

  • Identify taxpayers who must file, noting that SARS exempts individuals earning under R500,000 annually—provided they meet specific conditions.
  • Provide user-friendly checklists, schedules, and filing guides.
  • Deliver updates via targeted emails or virtual briefings, covering SARS procedural updates, mobile filing options, and document verification requirements.

Key Compliance Considerations

  • Late submissions may incur administrative penalties of up to R250/month.
  • Non-disclosure or overstatement of deductions risks audits and understatement penalties of up to 200%.
  • SARS’s increasing reliance on data analytics and third-party integrations demands bulletproof accuracy and record retention by firms.

Finalisation of Annual Financial Statements (AFS) and Independent Reviews

While managing the pressures of tax season, auditing firms are simultaneously tasked with the accurate and timely preparation of Annual Financial Statements (AFS) and Independent Reviews for their corporate clients. This is particularly relevant for companies with a February year-end, whose statutory reporting deadlines typically align with mid-year activity.

Key Focus Areas for Finalisation

  1. Compliance with Reporting Standards
    AFS must align with applicable frameworks such as IFRS for SMEs or full IFRS, depending on the entity’s public interest score. Audit and assurance professionals must ensure consistency, clarity, and accuracy in financial disclosures.
  2. Risk and Materiality Assessment
    Conducting a fresh risk assessment is crucial, particularly in light of any operational or economic shifts over the past year. Material misstatements must be identified early in the finalisation process.
  3. Liaison with Management and Stakeholders
    Effective collaboration with client leadership ensures that all necessary disclosures, subsequent events, and board approvals are obtained timeously to avoid year-end bottlenecks.
  4. Independent Reviews for Non-Audit Clients
    For companies not requiring full audits, independent reviews still demand a detailed understanding of financial statements and the ability to flag inconsistencies. Proper execution here not only supports compliance but also builds client trust.

How Marwick & Company Supports Your Success

At Marwick & Company, we understand that this period can place significant pressure on internal teams. That’s why our experienced professionals work closely with businesses to streamline both individual tax submissions and financial statement finalisation. Whether it’s reviewing complex tax positions, validating SARS auto-assessments, or preparing fully compliant AFS and Independent Reviews, we ensure that no detail is overlooked.

Our clients benefit from our proactive communication, rigorous attention to detail, and practical insights that go beyond compliance to add real business value. With over 50 years of experience, Marwick & Company provides dependable support to help your business stay on track, remain compliant, and plan ahead with confidence.

Let us help you turn tax season into a strategic advantage. Get in touch with our team and schedule a consultation.

Contact our Estates Department for all your Estates-related needs.

Contact us