“What will you charge us to compile a set of financial statements?”
“What do you charge for a tax return?”
“Our auditors are too expensive – what will you charge us for a year?”
These are questions that are frequently asked of us and there are no simple answers to them. In the nature of things there are many variables that must be taken into account before we can give an indication of our costs and this estimate can only be made once we have gained a proper understanding of the client’s needs and circumstances.
In a time when most clients are particularly aware of costs it is important to us to ensure that our clients are properly informed of what they have to pay for our services and can rest assured that they are receiving value for their money. Business entities, employers and taxpayers are continuously being confronted with more tax-, statutory-, and other requirements and we are serious about ensuring that these requirements are complied with. This compliance obviously has cost implications which neither we nor our clients can control.
The costs for the services we render are essentially calculated in one of two ways: Firstly it is done on the basis of the time we spend on executing the work; the hourly tariff is calculated based on the experience and academic qualifications required of the person providing the service. Secondly, there are a number of services that are provided at a standard tariff per service.
Just like our clients we also want to keep our invoicing system as simple as possible, not only because it is easier to understand, but also in order to facilitate our administration as well as that of our clients. Thus, for example, only one invoice for a year’s service would suit us ideally, but because in some instances we also provide diversified services to a client, this is not always possible.
This article aims to provide our clients with a little more clarity about the nature of the services we render and the costs involved. This overview is not necessarily generally applicable to all clients but we trust that you will nevertheless find here the services that we provide to you.
1. Audit and review services
Audit and review services are usually provided on an annual basis and our costs in this regard are largely calculated based on the time spent by the audit team and, where applicable, travel and accommodation costs.
In the case of smaller audits invoicing is done after completion of the audit. Otherwise it is done as agreed with the client, in which case it could involve our asking for a deposit before the work commences, alternatively that interim invoices are issued as specific parts of the audit are completed.
Considering our professional accountability in the execution of an audit, our responsibilities may not be limited by a client. It is therefore difficult to provide an accurate indication of costs in advance since the extent of the audit work may change during the course of the audit.
2. Compiling of financial statements
The costs associated with compiling financial statements are calculated on the basis of time spent by the persons who compiled the statements and exercised quality control. Invoicing is usually done after completion of the assignment.
3. Tax services
We provide various tax services to our clients. Most common are the completion and submission of provisional tax returns and arranging for the payment of provisional tax, as well as completion and submission of annual tax returns and maintenance of the client’s eFiling profile.
We attempt as far as possible to charge a standard tariff for these services and at the beginning of the year our clients receive an invoice for the year’s tax services (excluding the completion and submission of annual tax returns since this is calculated by the time spent and is usually invoiced together with the financial statements.) The initial invoice includes all the work associated with the provisional tax returns, maintenance of the eFiling profile, and checking of the tax assessment.
Any tax work undertaken outside the scope of the work referred to above is invoiced at the conclusion of the assignment on the basis of the time costs incurred.
4. Secretarial services
Most of the secretarial services, i.e. those applicable to companies and close corporations, are invoiced at a fixed cost linked to the service provided, and invoicing is done at the conclusion of the assignment.
Other secretarial services that are invoiced at a fixed cost upon conclusion of the service, are the following:
a. The provision of documentation in order to comply with the requirements of the Financial Intelligence Centre Act;
b. Issuing of a B-BBEE certificate for entities with a turnover of less than R5 million (or as required by the specific industry);
c. Issuing of solvency certificates, shareholder- and directors confirmations, and audit certificates (usually applicable to property transactions).
At the beginning of the year we also send an invoice for secretarial services, mainly for the safekeeping of documentation, to our clients.
All companies and close corporations are required to annually submit a return to the CIPC. In most instances we do this on behalf of our clients. The charge for this is a fixed fee per submission.
5. Accounting processing of transactions, and monthly management statements
Our costs for the accounting processing of transactions on a monthly or bi-monthly basis, drawing up of management statements, and usually, the calculation of VAT liability and completion and submission of the required returns are, as a rule, based on the time spent on the work.
Since the activities are not likely to change in essence from month to month it is possible for us, after about three or four cycles, to arrange for a fixed cost for the services.
Invoicing is usually done at the end of the period to which the services apply.
6. Statutory registrations
Should we undertake any statutory registration on behalf of a client, e.g. registration as a vendor for VAT purposes or as an employer for the purposes of employee tax, unemployment insurance or skills development, the costs are invoiced at a standard tariff upon conclusion of the service.
7. Management consultations
Consultations take place on the basis of time spent, calculated at the hourly tariff of the person providing the service, and are invoiced after completion of the assignment or as mutually agreed with the client.
8. Salary administration
Provision of salary services on a monthly basis usually takes place at an amount that is agreed on beforehand and is calculated on the basis of a tariff per employee per month. These services usually include maintaining the leave register and monthly issuing of salary advices to employees, as well as six-monthly and annual reconciliations.
Invoicing is done monthly. Clients who use a debit order for payment receive a payment discount because our administrative burden is reduced in this manner.
9. Trust registration and administration
We have a standard charge for the compilation and registration of a deed of trust and the service is invoiced after completion of the assignment.
In instances where we act as a professional, independent trustee we charge an annual fee at the beginning of the year. This fee is determined in proportion to the extent of the activities in the trust and our involvement as a trustee, and includes our services for attending, and taking of the minutes of, one trustee meeting per annum.
Any services provided over and above those covered by our annual account is invoiced on the basis of time spent on executing the work.
10. Estate planning, execution and administration
Our charge for estate planning is usually agreed with the client on the basis of the complexity of the planning. In cases where a will must simply be drawn up without any consulting time required from the directors, the service is provided free of charge in certain circumstances. Where a director is involved in the planning, the costs are calculated on the basis of time spent on the work.
The compensation for execution of a deceased estate is fixed by statute at 3,5% of the gross value of the estate. We seldom charge the full compensation fee and agree in advance with the testator/testatrix on the fee, usually by means of a clause in the will. Should the testator/testatrix already be deceased and we act as agents for the executor, we will negotiate the compensation based on the nature, extent and complexity of the estate.
Inevitably, the above overview cannot provide absolutely clear answers to the questions raised at the start, but we trust that you will have gained a good idea of how we set about fairly calculating the costs for you as our client. Each request for service is evaluated on merit within the framework set out above and if you have any uncertainty you are advised to get in touch with the director who deals with your affairs. You are, of course, also welcome to call us should you have any questions about our standard tariffs.