Old public interest scores of 120
Why older public interest scores of exactly 120 are flagged in Achekam, how to recalculate or confirm each one, and what a changed score means.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa
Somewhere in your firm's client records there may be a list of South African companies whose public interest score is exactly 120. Some of them genuinely scored 120. Others may never have been scored at all, and carry 120 only because that number was once filled in by default.
The two look identical. And because the public interest score decides whether a company must be audited, a figure nobody actually calculated is not a harmless placeholder. It can sit behind an engagement type that is wrong for the client.
Achekam flags these old scores so that a person deals with each one. This article explains why 120 is suspect, what the firm must do with each flagged score, and how the result can change an engagement.
Why a score of exactly 120 is suspect
Old public interest scores of exactly 120 cannot be told apart from a former default. A company that really scored 120 and a company whose score was never worked out both show the same number.
Rather than guess which is which, Achekam flags every such score for a person to resolve. The list is under QUALITY & GOVERNANCE > Legacy PIS 120 Reviews.
The reason it matters is where 120 sits. Under Companies Regulation 28, a company with a public interest score of 350 or more must be audited, and so must one scoring 100 or more whose financial statements were compiled internally. A score of 120 sits above the lower threshold and below the higher one. Whether such a company needs an audit therefore turns on how its statements were compiled, and if the 120 itself is wrong, any conclusion built on it may be wrong too.
Recalculating, or confirming with a reason
For each flagged score, a person either recalculates it or confirms it, with a reason.
Recalculating means working the score out properly for the financial year concerned. Under Regulation 26(2), the score adds one point per average employee, one point per R1 million or part of third-party liabilities, one point per R1 million or part of turnover, and one point per individual with a beneficial interest. For current years, use the public interest score assessment in Achekam: staff prepare the score for a financial year from the client's records, a different person reviews it, and Achekam then says whether an audit or an independent review is required. Missing inputs are named, never assumed.
Confirming is appropriate only where the firm has evidence that 120 was genuinely calculated, such as a signed working paper from that year showing the inputs. The reason should point to that evidence. "Looks about right" is not a reason.
If in doubt, recalculate. It takes longer, but it replaces an uncertain number with one the firm can defend.
The original value is kept
Whichever route is taken, the original value is kept. Achekam does not overwrite the old 120 and forget it.
That is important for the firm's own record. If a recalculation shows the score was really, say, well above 350 for a year in which the client was only reviewed, the firm needs to see both figures to understand what happened and decide what to do. An inspector reviewing the firm's files would want to see the same thing: the old figure, the new one, who resolved it, when, and why.
What a changed score means for the engagement
A recalculated score can land in one of three places relative to the thresholds, and each has consequences.
| Recalculated score | Statements compiled internally? | What the law requires |
|---|---|---|
| 350 or more | Either | Audit |
| 100 or more, below 350 | Yes | Audit |
| 100 or more, below 350 | No | No audit under these thresholds; check the other requirements |
| Below 100 | Either | No audit under these thresholds; check the other requirements |
Where a client now appears to need an audit that it was not receiving, or no longer needs one, the decision on the engagement type stays with a partner: Achekam says what the score indicates, and a partner records the engagement type. Consider:
- whether the current year's engagement is still the right type;
- whether any past year's engagement was the wrong type, and what, if anything, should be done about it;
- what the client must be told, and by whom;
- whether the client's memorandum of incorporation or another requirement calls for an audit regardless of the score.
The practical steps for moving a client from a review to an audit are in moving a client from review to audit, and the wider rules in when a South African company must be audited. The government publishes the Companies Regulations, 2011, which include the public interest score calculation and the audit and independent review requirements.
Clearing the list
Treat the flagged list as a short project with an owner and an end date, not a background task.
- Assign an owner, usually a manager in the assurance or technical function.
- Sort the list by client status: active clients first, then those with engagements due soonest.
- Gather the inputs for each: employee numbers, liabilities, turnover and the count of individuals with a beneficial interest, for the relevant year.
- Recalculate or confirm each score, with a reason recorded.
- Refer any change in the indicated engagement type to the responsible partner.
- Report progress to the quality partner until the list is empty.
Open the Legacy PIS 120 Reviews list this week, count how many scores are flagged, and agree with your quality partner who will own clearing it.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
