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CIPRO WILL COST THE ACCOUNTING PROFESSION AN ADDITIONAL R300
MILLION OVER THE NEXT YEAR
I am one of the founding members of a company called Accfin Software. We have been selling company secretarial software to the accounting profession over the last 18 years. Many major corporate companies and most of the auditing firms who do secretarial work use our product Secretarial Assistant. We also run a web site called www.websec.co.za. which is a search engine that our software interacts with giving our clients comparisons with their data to CIPRO’S data on the websec website. We buy the data from CIPRO on a monthly basis. I would estimate that our system Secretarial Assistant probably runs more then half the registered Companies and CC’s in South Africa. We therefore are a significant stakeholder and have a significant interest in The reason why I am writing relates to the proposed implementation of Annual Returns for private Companies and Close Corporations with effect from 1 May 2005. See Appendix C When annual returns were proposed for public companies in August 2003 I approached CIPRO pointing out our objections to the proposed implementation. Below is the extract of the letter that “the data being requested as per your recent memorandum and screen layouts currently resides within the database of our various clients who use the Secretarial Assistant software. In reading your memo our clients would have to print out the information from Secretarial Assistant and then re-punch the data into the CIPRO website making the necessary arrangements for proper registration and for payment. Some of our very large auditing clients may have something like 3000 –4000 thousand entities and if we assume even distribution over the year say 300 per month. Taking into account the speed of the website and the increased usage of the website it will take a minimum of at least 30 minutes per entity (and I am being conservative) 150 hours per month. Multiple this by 12 and there is going to be huge resistance. Even small firms who have to do 20 or 30 a month will not have the resources to do this. If we take the current performance of the web site the time taken to input the data could take a lot more then we think. This is in fact a huge cost for firms struggling with increased admin requirements to bear. At this point we still don’t know what the annual duty is going to be. I would like to suggest that we look at providing you with the data electronically in the format you specify on an auditing firm basis. This will be done through us as an additional service to our clients. As we are doing it electronically it can be done annually and all payments can be made annually up front to you directly from each auditing firm or through us. The value of this is that your website traffic is reduced significantly, you receive the data faster and you reduce your As this is a suggestion I think it would be in everyone’s interest to find a way of working together to reduce the workload of both parties. I know that I have significant support of many of Based on this communication a meeting was set up with the three vendors of systems in South Africa. A very positive meeting was held and then nothing happened. All the parties on the CIPRO side disappeared. We were always left with the impression that we were going to be consulted for the implementation of the private companies and close corporations. Three days ago to our surprise CIPRO has decided to go it alone and in so doing is going to be costing the accounting profession some R300million (see appendix A) in costs that they have to We have tried to communicate with management at CIPRO, but no one is taking any calls. It is unacceptable that a body like CIPRO imposes it’s will on stakeholders without a proper consultation process. Annual Duties and forms stopped in 1987 so there has not been an independent verification of the data since then. Most practioners will tell you that service delivery from CIPRO is pathetic to say the least. Their data is a mess owing to their incompetence and now the buck and cost is being passed over to the private sector.
Appendix A
There are some 2,5 million company and CC entities in RSA. Lets assume that the accounting profession will handle 1,5 million and will access the necessary CIPRO website to input the data that CIPRO requires for Annual Duty purposes. Assume that it will take 40 minutes (see appendix B) per entity to prepare, collect, punch and pay. Therefore (1,500,000 X 40)/60 equals 1,000,000 hours. We assume a cost or overhead rate of R300 average per firm. This amounts to
Appendix B
There are a number of steps in the annual duty process. Step 1. Register a director or member of the company as a customer on the website. Fax Step 2. Once activated deposit money into CIPRO account. Step 4. Once payment linked to customer process annual duty form on website. For the purpose of our calculations we assume that it will take 40 minutes on average per entity. We have been told that as much as an hour and a half has been spent on public company entities.
Appendix C
Section 173 of the Companies Act, 1973, which came into operation on 25 August 2003, provides that all companies must lodge an Annual Return with the Registrar. The section further requires that this return must be lodged every year by not later than the end of the month, which follows upon the month within which the anniversary of the date of the company's incorporation Annual returns refer to the information that companies and close corporations must submit to the Registrar as confirmation that the company / close corporation is still in business and that the information provided is still valid. It has become imperative that Annual Returns should be introduced for purposes of data integrity and information reliability. Annual Returns are used in most countries across the world to update information kept by the Registrar.
All private Companies are obliged to submit their Annual Returns with effect from May 1,
2005 together with the following prescribed fees:
• Annual turnover less than R10m. . . . . . . . . . . . . . . . . . . . . . . .R450.00
• Annual turnover above R10m but less than R50m. . . . . . . .R2 500.00
• Annual turnover R50m and above. . . . . . . . . . . . . . . . . . . . . .R4 000.00
Since Annual Returns for Private Companies come into effect as from May 1, 2005, this
means Companies that were incorporated in May, irrespective of the date and year, will
have to submit their Annual Returns by no later than end of the following month, in this
case it's June. Those incorporated in June will lodge by no later than end of July, and so
Companies will only be allowed to lodge Annual Returns electronically. Electronic transactions will have the effect that CIPRO will not accept or receive paper documents or cash from the companies. All lodgments and payments will be done via an electronic banking system preferably by using credit cards. Alternatively, the required money can be deposited in the CIPRO bank account at ABSA Bank, Account no. 4055681017, Branch Code 323345. The reference required on the ABSA deposit slip is most important and all persons wishing to lodge annual returns must first register as a "customer" on the CIPRO Website. It must also be noted
that only directors and officers of companies who are registered as such with CIPRO will be able Annual Returns will be facilitated through our CIPRO website where we will be showing the company what information CIPRO has on the company. The annual return information will be stored separately on our database and will not update the actual database. Companies will still be required to lodge any relevant CM Forms to update changed information. If a company fails to lodge its Annual Returns and subsequently fails to pay the prescribed fee, an additional fee of R150.00 will be levied on the defaulter. If after successive reminders, the defaulter still fails to lodge and/or pay, the Registrar will, after six months, institute deregistration proceedings against the company. Please note that this information will also be published in the newspapers and other
communication media during the course of the week.
REGISTRAR OF COMPANIES

Source: http://www.accfin.co.za/cipro.pdf