| Summary: | The report of the accounting officer is of little or no value.
There is uncertainty about the duties of the accounting officer where there are material
omissions and mistakes in the accounting records and financial statements of the close
corporation because the report of the accounting officer must only state that the financial
statements are in agreement with the accounting records. Nowhere in the Close Corporation Act
it is stated what the duties of the accounting officer are whether he is aware or not of such
mistakes or omissions.
The close corporation doesn't require the accounting officer to do an audit on the books and
records of the close corporation, and the accounting officers are therefore under the impression
that they may not be held liable for all the debts of the close corporation.
The accounting officer is however vulnerable as his duties in terms of the Close Corporation Act
are far reaching and he cannot fulfil his duties completely unless he has done an audit, and can
therefore be held liable for the debts of the close corporation.
He can further be held liable for the debts of the close corporation due to the following:
7.1 the shortcomings in the Close Corporation Act nr. 69 of 1984;
7.2 the impracticability of the Close Corporation Act;
7.3 the vagueness and indistinctness of certain articles in the Act that the accounting officer must
comply with or are exposed to;
7.4 the accounting officer may use his professional judgment to investigate the accounting
records of the close corporation, and nothing prohibits him to do so if he think it lit.
If however he is of the opinion that it is not necessary to investigate the accounting
records, this will contribute towards the accounting officer becoming liable for the debts
of the close corporation, although the Act doesn't require the accounting officer to do
an audit on the books and records of the close corporation.
In the case where the accounting officer decides to investigate the books and records of
the close corporation, his duties are extensive because he takes the decision to investigate.
7.5 The accounting officer act in many cases as advisor/bookkeeper/ accountant for the CC,
because of the size and nature of the entity, and by doing that, he then participates in the
management of the CC and he is then vulnerable in terms of section 64 of the Close
Corporation Act to be liable for all the debts of the corporation, without being the
accounting officer's intention to participate in the management of the close corporation.
7.6 The powers of the accounting officer are not fully addressed in the Close Corporation Act
and the accounting officer is not properly protected by the Act.
Because of the current Close Corporations Act, the interpretation and use thereof, the accounting
officer is excessively vulnerable to creditors and third parties of the close corporation and he can
be held liable for all the debts of the close corporation.
Amendments and changes to the act are necessary to clarify the duties of the accounting officer
and to get certainty about certain articles in the Act which are vague. === Thesis (M.Com. (Financial Accounting))--North-West University, Potchefstroom Campus, 2005.
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