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Update for August 2009
Update for August 2008
Update for October 2007
Update for January 2007
Update for July 2003
Update for April 2003
Update for January 2003
Update for October 2002
Update for July 2002
Update for April 2002
Update for October 2001
Update for July 2001
Update for May 2001
Johannesburg:
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Technically Speaking Quarterly Newsletter
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Deloitte (South Africa) publishes a quarterly newsletter Technically Speaking that provides insights, guidance, and summaries of issues that are affecting the accounting, auditing, and regulatory environment in South Africa, as well as other matters of general interest. You can download the newsletter below.
| Deloitte South Africa's Technically Speaking Newsletter |
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August 2009 Update
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At its meeting on 13 August 2009, the Accounting Practices Board of the South African Institute of Chartered Accountants voted to issue the IFRS for SMEs as a South African Statement of GAAP: IFRS for SMEs for use immediately. The original text of the IFRS for SMEs was adopted without any change. When an auditor issues an audit report on an entity applying the new South African standard, the audit report will identify the accounting framework as the International Financial Reporting Standard for Small and Medium-sized Entities. All entities that fall within the scope of IFRS for SMEs (ie, entities that are not publicly accountable) can use the new standard. By this action, South Africa has become the first country in the world to adopt the IFRS for SMEs, which was issued by the IASB on 9 July 2009. All companies listed on the Johannesburg Stock Exchange are required to use full IFRSs. Click for More Info about the IFRS for SMEs.
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August 2008 Update
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JSE requires auditors to have 800 hours IFRS training
The Johannesburg Stock Exchange has amended its listing requirements to require all independent auditors of listed companies to have experienced IFRS specialists and to register with the JSE. Specifically, the new JSE rules:
- establish a JSE Registry for Auditors and their IFRS advisors
- require any audit firm that wishes to audit listed companies to be registered with the JSE
- require all audit firms to have at least three individual auditors within the firm registered with the JSE
- require all audit firms to have at least one IFRS advisor, either internal or external to the firm, registered with the JSE. The role of the IFRS advisor includes providing 'technical IFRS assistance and advice in support of the assurance opinion'.
- require IFRS advisors to have spent a specified number of hours on 'performing practical and interpretive IFRS consulting over the past 12 months in order to have a comprehensive working knowledge of IFRS'.
- If the IFRS advisor is a single individual, 800 hours of IFRS experience in the past 12 months is required.
- If the IFRS advisor is one of two individuals who work as part of an IFRS advisory group, each of those individuals must have spent at least 500 hours on IFRS work in the past year.
The JSE requires listed companies to follow IFRSs and requires auditors to follow International Standards on Auditing. Click for JSE Listing Requirements that Contain the New Rules (PDF 169k).
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October 2007 Update
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South Africa adopts IASB's SME proposal as GAAP for SMEs
The Accounting Practices Board (APB) of the South African Institute of Chartered Accountants (SAICA) has adopted the IASB's proposed International Financial Reporting Standard for SMEs as a final Statement of Generally Accepted Accounting Practice (GAAP) for Small and Medium-sized Entities (SMEs). The APB's reason for doing so is that full South African GAAP is converged with full IFRSs, and many South African SMEs have found these requirements burdensome and too complex for their needs. A recent change in South African company law has made provision for differential reporting for 'limited interest companies' (SMEs) from full South African GAAP if they want it.
Entities eligible to use the new Statement of GAAP for SMEs:
- Companies: The Statement of GAAP for SMEs may be applied by 'limited interest companies', as defined in the Corporate Laws Amendment Act of 2006 (that is, they are not 'widely held'), if they do not have public accountability (that is, not listed and not a financial institution). Alternatively, the company may choose to apply full South African Statements of GAAP or full IFRSs.
- Entities other than companies:
- If the law or a regulation requires an entity to comply with a specific financial reporting framework other than South African Statements of GAAP, the entity is not eligible to use the Statement of GAAP for SMEs.
- In all other cases, if the entity does not have public accountability, it should assess whether it is appropriate to apply the Statement of GAAP for SMEs.
How to describe the basis of presentation:
- Companies and other entities using the Statement of GAAP for SMEs must say so in the notes to financial statements. The audit report should do likewise. Reference should not be made to an IFRS for SMEs.
Effective date:
- Companies: The Statement may be applied to annual financial statements for financial years ending on or after 31 December 2005 that are issued on or after 1 October 2007.
- Entities other than companies: The Statement may be applied to annual financial statements that are issued on or after 1 October 2007.
Click for more information:
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January 2007 Update
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During 2003, the local standard setting body made a decision to issue the text of IFRSs in South Africa as South African Statements of Generally Accepted Accounting Practice (SA GAAP).
Currently (start of 2007), with the exception of IFRS 1, which applies only to first time adopters of IFRSs, SA GAAP and IFRSs are fully harmonised. To indicate the harmonisation, SA GAAP has a dual numbering system to refer to both the IFRS and SA GAAP numbers.
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July 2003 Update
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South African Listed Companies Must Follow IFRS
The JSE Securities Exchange South Africa (JSE) has approved substantial amendments to its listing rules that will require all companies listed on the exchange to comply with International Financial Reporting Standards (IFRS) for years commencing on or after 1 January 2005. Previously, a company whose primary listing is on the JSE could elect to comply with either South African Statements of Generally Accepted Accounting Practices (SA GAAP) or IFRS.
Under the amended JSE rules, a JSE GAAP Monitoring Panel will have the authority to sanction listed companies for non-compliance with either SA GAAP or IFRS. Go to: JSE Securities Exchange South Africa Website
SAICA's Submission to the Ministerial Review Panel
On 5 December 2002 the Minister of Finance established a panel to review the Draft Accountancy Profession Bill. The general objective of the Panel is to promote the continued integrity of financial markets through the effective regulation of auditors and accountants and the Panel is to make recommendations to the Minister by the end of July 2003. It is expected that the revised Bill will be presented to Cabinet towards the end of the year.
The Panel has requested all interested parties to comment on its terms of reference and related matters. The terms of reference, inter alia, include the structure of the regulatory framework, auditor rotation, disciplinary procedures for auditors and executive management of companies, accounting standards, etc. SAICA has submitted a comment letter to the Panel where its views on these matters and other related issues are put forward. This comment letter is available on the SAICA website.
AC 300 Series Opinions
The APC is revising the process of issuing South African GAAP. As part of this process it intends to remove the AC 300-series Opinions and, where required, replace such Opinions with an AC 500-series Interpretation.The AC 300 series were opinions issued by the Accounting Issues Task Force (established by SAICA), in order to provide a forum for timely review of accounting issues that are, or could be subject to divergent, or unsatisfactory treatment in practice. Task force opinions do not override principles established by Generally Accepted Accounting Practice (GAAP) in the AC 100 and 400 series, but offer guidance to preparers, auditors and users of financial statements, thus facilitating the standardization of accounting treatments.The AC 500 series pronouncements will be approved for issue by the Accounting Practices Board and will have the same authority as the AC 100 series Statements of GAAP and AC 400 series Interpretations.Most of the AC 300 series opinions have subsequently been withdrawn and the first two proposed AC 500 series pronouncements are now being exposed for public comment.
ED 163: Framework for the Preparation and Presentation of Limited Purpose Financial Statements
The Limited Purpose Financial Reporting Exposure Drafts were prepared for use by entities that qualify in terms of the Financial Reporting Bill (The Bill) to present financial statements that comply with Limited Purpose Financial Reporting Standards (LPFRS).
The Bill provides, inter alia, for the preparation of financial statements by entities using LPFRS. Entities using LPFRS are hereinafter referred to as 'qualifying entities'. The Bill focuses on the user to determine when LPFRS may be used. Size is not a criterion. Qualifying entities may be large or small.The closing date for comments from the public is 31 October 2003.
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April 2003 Update
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The following South African Exposure Drafts are still outstanding:
- ED 140: Report of Historical Financial Information to be Included in a Prospectus or JSE Circular (No IAS / IFRS).
- ED 154: Amendment to AC 116, Employee Benefits: asset ceiling
- ED 155: Proposed improvements to Statements of Generally Accepted Accounting Practice.
- ED 156: Limited amendments to AC 133 - Financial Instruments: Recognition and Measurement.
- ED 157: Improvements to IAS 32 (AC 125) - Financial Instruments: Disclosure and Presentation and IAS 39 (AC 133) - Financial Instruments: Recognition and Measurement.
- ED 158: First-time Application of International Financial Reporting Standards.
- ED 160: Share-Based Payment.
- ED 161: Business Combinations.
Recently Released Exposure Draft
ED 159, Accounting for Secondary Tax on Companies (STC) (issued September 2002)This ED proposes to replace AC 303 and includes the following issues:
- STC should be treated as part of the income tax charge in the income statement for the period. The resulting tax charge in the income statement may therefore be disproportionate to pre-tax earnings.
- STC is a charge against income, and should be recognised as an expense in the same period as the related dividend is accrued as a liability.
- Where an equity instrument is classified as a liability and a dividend related to that equity instrument has been accrued as a liability at balance sheet date, the related STC should also be accrued as a liability at the same time.
- STC arising on the reacquisition by an enterprise of its own equity instruments should be accounted for as part of the tax charge in the income statement and not as a deduction directly from equity.
- Where cumulative preference dividends have not yet been declared at the balance sheet date, both the preference dividends and the related STC should be deducted from the net profit or loss for the purposes of calculating basic earnings per share.
- STC expense charges should be recognised in each interim period based on the dividend accrued as a liability during that interim period.
Amendments to IAS 32 and IAS 39 (AC 125 and AC 133)
The International Accounting Standards Board (IASB) decided that it will hold a series of public roundtable discussions in London in March 2003 with respondents to the recent exposure draft of proposed amendments to International Accounting Standard (IAS) 32, Financial Instruments: Disclosure and Presentation and IAS 39, Financial Instruments: Recognition and Measurement.
SAICA is considering holding the same public roundtable discussions on the local equivalent Statements of Generally Accepted Accounting Practice, AC 125, Financial Instruments: Disclosure and Presentation and AC 133, Financial Instruments: Recognition and Measurement. Details of similar discussions in South Africa will be published in due course.
Recently Released Circulars
The following accounting circulars have been issued by SAICA:
Circular 5/2002, Reporting on Financial Information Contained in Interim Reports, Preliminary Reports and Voluntary Announcements of Annual Results.
The JSE Securities Exchange (JSE) requires an audit or review opinion to be expressed by the auditor in certain circumstances. The use of the term "unaudited" results, is no longer allowed in all instances, for example if there was a qualified audit opinion in the prior period.
Circular 7, Headline Earnings Per Share (HEPS) (Effective 17 December 2002)
This circular replaces AC 306, Headline Earnings and has significant implications on the headline earnings per share calculations.
Circular 7/2002 should be applied retrospectively and previously reported headline earnings per share should be restated, in accordance with AC 103, Net profit or loss for the period, fundamental errors and changes in accounting policies.
Some of the changes contained in Circular 7/2003 are:
- Costs that specifically relate to discontinuing operations are excluded from HEPS.
- Restructuring costs remain in HEPS.
- Reorganisation costs are excluded from HEPS
- Reference to fixed assets only includes Property plant and equipment, Intangible assets and Investment Property. Profit or loss on the sale of fixed assets and businesses are excluded from HEPS. Impairments of fixed assets are excluded from headline earnings per share. Amortisation of fixed assets remains in HEPS.
- Amortisation and impairment of goodwill is excluded from headline earnings per share.
- Gains or losses recorded in the income statement that relate to financial instruments remain in HEPS. The only exception to this rule is the recycling of available for sale financial assets, where the policy adopted is to accumulate gains or losses in equity until realisation of the available for sale financial asset.
- Fair value adjustments to biological assets and agricultural produce remain in HEPS.
- Provisions recognised in accordance with AC 130, Provisions, Contingent Liabilities and Contingent Assets, should remain in HEPS.
- Pension costs remain in HEPS. An exception to the rule is where an increase in a defined benefit liability is as a result of the transitional provisions of AC 116, Employee Benefits.
- Foreign exchange items in the income statement remain in HEPS unless they arise as a result of the realisation of a foreign entity investment or loan (realisation of the NDR)
- Recognition, write off and rate change in respect of current and deferred tax remains in HEPS.
AC 300 Series Opinions
The APC is revising the process of issuing South African GAAP. As part of this process it intends to remove the AC 300-series Opinions and, where required, replace such Opinions with an AC 500-series Interpretation.
The AC 300 series were opinions issued by the Accounting Issues Task Force (established by SAICA), in order to provide a forum for timely review of accounting issues that are, or could be subject to divergent, or unsatisfactory treatment in practice. Task force opinions do not override principles established by Generally Accepted Accounting Practice (GAAP) in the AC 100 and 400 series, but offer guidance to preparers, auditors and users of financial statements, thus facilitating the standardisation of accounting treatments.
The AC 500 series pronouncements will be approved for issue by the Accounting Practices Board and will have the same authority as the AC 100 series Statements of GAAP and AC 400 series Interpretations.
Most of the AC 300 series opinions have subsequently been withdrawn and the first two proposed AC 500 series pronouncements are now being exposed for public comment. They are:
- ED 152 (proposed AC 500) - Preface to the AC 500 series of Statements of Generally Accepted Accounting Practice.
- ED 153 (proposed AC 501) - Accounting for Secondary Tax on Companies.
The following SA Draft Interpretations are still outstanding:
- ED-SIC 426 - Property, Plant and Equipment - incidental & start-up operations
- ED-SIC 434 - Financial instruments - Instruments or rights redeemable by the holder
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January 2003 Update
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The following South African Exposure Drafts are still outstanding:
- ED 140: Report of Historical Financial Information to be Included in a Prospectus or JSE Circular (No IAS).
- ED 154: Amendment to AC 116, Employee Benefits: asset ceiling
- ED 155: Proposed improvements to Statements of Generally Accepted Accounting Practice.
- ED 156: Limited amendments to AC 133 - Financial Instruments: Recognition and Measurement.
- ED 157: Improvements to IAS 32 (AC 125) - Financial Instruments: Disclosure and Presentation and IAS 39 (AC 133) - Financial Instruments: Recognition and Measurement.
- ED 158: First-time Application of International Financial Reporting Standards.
Recently Released Exposure Drafts
ED 160: Share-Based Payment
In November 2002, the Accounting Practices Committee (APC) released Exposure Draft (ED) 160, Share-Based Payment, for public comment. The ED is based ED 1 with the same name, which was issued by the International Accounting Standards Board (IASB).The objective of the proposed standard is to ensure that an entity recognises all share-based payment transactions in its financial statements, measured at fair value, so as to provide high quality, transparent and comparable information to users of financial statements.
The proposed standard requires an entity to recognise all share-based payment transactions in its financial statements, including transactions to be settled in cash, other assets, or equity instruments of the entity, and transactions with employees or other parties. There are no exceptions to the ED, other than for transactions to which more specific standards apply.
Comments to this Exposure Draft are due by 21 February 2003.
ED 161: Business Combinations
On 18 December 2002 the APC released Exposure Draft (ED) 161, Business Combinations, for public comment. The ED is based on ED 3 with the same name, which was issued by the IASB. The objective of the proposed standard is to improve the quality of, and seek international convergence on, the accounting for business combinations. One of the main features of the proposed standard is that there would be no amortisation of goodwill or intangible assets with indefinite useful lives. There are also proposed amendments to AC 128 Impairment of Assets and AC 129 Intangible Assets.
Comments to this ED are due by 20 March 2003.
Recently Released Circulars
Circular 7/2002
On 17 December 2002 the South African Institute of Chartered Accountants released Circular 7/2002 - Headline Earnings. This circular replaces AC 306 and is effective immediately. It should be used in the calculation of both headline earnings and diluted headline earnings per share ('HEPS').
On 30 December 2002 the JSE issued a letter to issuers indicating that this circular should be followed with immediate effect.
AC 300 Series Opinions
The APC is revising the process of issuing South African GAAP. As part of this process it intends to remove the AC 300-series Opinions and, where required, replace such Opinions with an AC 500-series Interpretation.
The AC 300 series were opinions issued by the Accounting Issues Task Force (established by SAICA), in order to provide a forum for timely review of accounting issues that are, or could be subject to divergent, or unsatisfactory treatment in practice. Task force opinions do not override principles established by Generally Accepted Accounting Practice (GAAP) in the AC 100 and 400 series, but offer guidance to preparers, auditors and users of financial statements, thus facilitating the standardisation of accounting treatments.
The AC 500 series pronouncements will be approved for issue by the Accounting Practices Board and will have the same authority as the AC 100 series Statements of GAAP and AC 400 series Interpretations.Most of the AC 300 series opinions have subsequently been withdrawn and the first two proposed AC 500 series pronouncements are now being exposed for public comment. They are:
- ED 152 (proposed AC 500) - Preface to the AC 500 series of Statements of Generally Accepted Accounting Practice.
- ED 153 (proposed AC 501) - Accounting for Secondary Tax on Companies.
The following SA Draft Interpretations are still outstanding:
- ED-SIC 426 - Property, Plant and Equipment - incidental and start-up operations.
- ED-SIC 434 - Financial instruments - Instruments or rights redeemable by the holder.
SAICA and JSE Work Together to Ensure Accounting Compliance
The South African Institute of Chartered Accountants (SAICA) and the JSE Securities Exchange South Africa (JSE) have established a panel of specialists to ensure that listed companies comply with South African Statements of Generally Accepted Accounting Practice (GAAP). GAAP accords with International Financial Reporting Standards (IFRS).
At present, GAAP does not have legal backing within legislation. Government, in response to SAICA's request to provide legal backing, has drafted legislation in the form of the Financial Services Bill. Currently, all listed companies are obliged by the listings requirements of the JSE to comply with GAAP or IFRS. As the JSE lacks the resources to solely monitor compliance with accounting standards it has partnered with SAICA to ensure that listed companies do comply. The GMP will not review all companies' financial statements but will investigate complaints referred by the JSE that GAAP had not been observed.
SAICA and the JSE will both be vigilant for non-compliance.
The GMP comprises specialists from various business fields with knowledge of GAAP. Complaints will be referred by the JSE to the panel of specialists. The chairman of the GMP will refer the matter to a review committee selected by him from the panel, the members of which will be anonymous for a particular complaint and will report their findings to the JSE listings division. The JSE will use existing structures to address the matter and consider further action.
The JSE can also lodge a formal complaint to the Public Accountants' and Auditors' Board in cases where a Registered Accountant and Auditor acting as an auditor to a company issued an inappropriate audit opinion, and to SAICA, in instances where a SAICA member was involved in the preparation and or approval of the financial statements.
The GMP was launched on 4 September 2002.
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October 2002 Update
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The Accounting Practices Board (APB) in South Africa (SA) has a policy of
harmonising SA Statements of Generally Accepted Accounting Practice
(GAAP) with IAS. With the exception of the effective dates of the
Statements, all SA Statements are similar to IAS.
The following SA Exposure Drafts are still outstanding:
- ED 140: Report of Historical Financial Information to be Included in a
Prospectus or JSE Circular (No IAS).
- ED 151: Headline Earnings
- ED 154: Amendment to AC 116, employee benefits: asset ceiling
- ED 155: Proposed improvements to Statements of Generally Accepted
Accounting Practice.
- ED 156: Limited amendments to AC 133 - Financial Instruments:
recognition and measurement.
- ED 157: Improvements to IAS 32 (AC 125) - Financial Instruments:
disclosure and presentation and IAS 39 (AC 133) - Financial
Instruments: recognition and measurement.
- ED 158: First-time Application of International Financial Reporting
Standards.
Following the publication of ED 1, First-time Application of International
Financial Reporting Standards, by the IASB for comment, SAICA (South
African Institute of Chartered Accountants), issued ED 158 in July 2002,
which is based on the international exposure draft, with a comment date of
16 October 2002.
The Accounting Practices Committee (APC) is revising the process of
issuing local Statements of Generally Accepted Accounting Practice
(GAAP). As part of this process, it intends to clean out the AC 300-series
Opinions and, where required, replace such Opinions with an AC 500-series
Interpretation.
The AC 300 series are opinions issued by the Accounting Issues Task Force
(established by SAICA), in order to provide a forum for timely review of
accounting issues that are, or could be subject to divergent, or unsatisfactory
treatment in practice. Task force opinions do not override principles
established by Generally Accepted Accounting Practice (GAAP) in the AC
100 and 400 series, but offer guidance to preparers, auditors and users of
financial statements, thus facilitating the standardisation of accounting
treatments.
The AC 500-series pronouncements will be approved for issue by the APB
and will have the same authority as the AC 100 - series Statements of
GAAP and AC 400 - series Interpretations.
Most of the AC 300 - series Opinions have subsequently been withdrawn
and the first two proposed AC 500 - series pronouncements are now being
exposed for public comment. They are:
- ED 152 (proposed AC 500) - Preface to the AC 500-series of
Statements of Generally Accepted Accounting Practice.
- ED 153 (proposed AC 501) - Accounting for Secondary Tax on
Companies .
The following SA Draft Interpretation is still outstanding:
- ED-SIC 434 - Financial instruments - Instruments or rights redeemable
by the holder
ED-SIC 432 - Intangible assets - Website Costs was issued as AC 432 in
September 2002.
Auditing Standards Board issues SAAPs on electronic commerce – effect on the audit of financial statements
At its meeting in July 2002 the Auditing Standards Board (ASB) of the
Public Accountants and Auditors Board approved for issue South African
Auditing Practice Statement (SAAPS) 1013, Electronic Commerce - Effect
on the Audit of Financial Statements. Increasing use of the Internet for
business-to-consumer, business-to-business, business-to-government and
business-to-employee e-commerce is introducing new elements of risk that
need to be considered by auditors when planning and performing the audit
of financial statements. This practice statement has been issued in order to
assist auditors in identifying and assessing these risks. While this practice
statement has been written for situations where an organisation engages in
commercial activity over a public network such as the Internet, much of the
guidance it contains can also be applied when the entity uses a private
network.
Similarly, while much of the guidance will be helpful to auditors engaged in
auditing entities organised primarily for e-commerce activities (often called
'dot.coms'), it is not intended to deal with all audit issues that would be
addressed in the audit of such entities.
Access to Information Act
The Ministry of Justice granted extension for preparation of manuals in
terms of the Access to Information Act. The Ministry of Justice advised
that all public and private companies have been granted an extension to
compile the required manuals as per the above Act, until 28 February 2003.
The Minister's office further advised that they would be willing to consider
further submissions and presentations for the possible granting of exemption
on the issue in the interim. The Institute of Retirement Funds South Africa
will be pursuing these avenues on behalf of its members very shortly. This
issue was gazetted on Friday, 16 August 2002. Click to
View the Act.
Submission of financial statements to the JSE Securities Exchange South Africa
The JSE Securities Exchange (JSE) sent out a letter to all listed companies,
dealing with the submission of financial statements. The contents are
summarised below.
In the recent past it has become apparent that financial statements submitted
by listed companies to the Listings Division for approval are in many
instances failing to comply with the rules and regulations of the JSE. This
results in delays in the publication of financial statements, which is clearly
not in the interest of companies or their shareholders.
In order to expedite the approval process and in order to eliminate delays in
the publication of financial statements, a summary of the rules and
regulations of the JSE relating to financial statements is set out below.
In terms of the Listings Requirements of the JSE, all listed companies are
required to publish interim results within three months of the end of the
interim period.
Furthermore, if a company does not post its annual financial statements to
its shareholders within three months of its financial year-end, it is required
to publish preliminary results within this three-month period. Prior to
publication all financial results must be submitted to the Listings Division.
In terms of section 3.23(c) of the Listings Requirements, the company's
auditors must review preliminary results if these have not been audited and
this should be stated in the heading. In addition, the preliminary results must
state the name of the auditors and that the auditor's review opinion will be
available for inspection at the company's registered office. In the case where
the preliminary results have been audited, this should be stated in the
heading and the name of the auditor must be disclosed. It has come to the
attention of the Listings Division that in many instances financial
statements, which state that these have been audited, are in fact not audited
in that the audit opinion has not yet been signed by the auditors. Henceforth
and with immediate effect, audited financial statements must state that the
auditors' audit opinion will be available for inspection at the company's
registered office. The Listings Division reserves the right to request a copy
of the audit opinion before approving the publication of the audited financial
statements.
In the case of financial statements that must be reviewed:
- The heading must state clearly that the financial statements have been
reviewed.
- There must be a statement that the results have been reviewed by the
company's auditors (the name of the auditor must be disclosed) and that
the review opinion is available for inspection at the company's
registered office.
In the case of audited financial statements:
- The heading must state clearly that the financial statements have been
audited.
- There must be a statement that the results have been audited by the
company's auditors (the name of the auditor must be disclosed) and that
the audit opinion is available for inspection at the company's registered
office.
We wish to point out that, although in terms of the Listings Requirements
financial statements must be prepared in accordance with South African
Statements of Generally Accepted Accounting Practice (GAAP) or
International Accounting Standards (IAS), it is not practical for the Listings
Division to monitor full compliance in this regard. This would clearly result
in lengthy delays between submission of the financial statements and
approval being given by the Listings Division. We will therefore presume
that the directors and/or the auditors have ensured that there is full
compliance with GAAP or IAS, and that the directors and sponsors have
ensured compliance with all the rules and regulations of the JSE.
Please note that approval of financial statements by the Listings Division for
publication should not be construed as confirmation that the financial
statements comply fully with GAAP or IAS. However, if it comes to the
attention of the Listings Division that a company's financial statements that
have been published do not comply fully with GAAP or IAS, the company
may be required to republish their financial statements in order that they do
comply.
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July 2002 Update
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The Accounting Practices Board (APB) in South Africa (SA) has a policy of harmonising SA Statements of Generally Accepted Accounting Practice (GAAP) with IAS.
With the exception of the effective dates of the Statements, all SA Statements are similar to IAS.
The following SA Exposure Draft is still outstanding:
- ED 140, Report of Historical Financial Information to be Included in a Prospectus (no equivalent IAS ED exists).
The Accounting Practices Committee (APC) is revising the process of issuing local Statements of Generally Accepted Accounting Practice (GAAP). As part of this process they intend to clean out the AC 300 series Opinions and, where required, replace such Opinions with an AC 500 series Interpretation.
The AC 300 series are opinions issued by the Accounting Issues Task Force, established by the South African Institute of Chartered Accountants (SAICA), in order to provide a forum for timely review of accounting issues that are, or could be subject to divergent, or unsatisfactory treatment in practice. Task force opinions do not override principles established by Generally Accepted Accounting Practice (GAAP) in the AC 100 and 400 series, but offer guidance to preparers, auditors and users of financial statements, thus facilitating the standardisation of accounting treatments.
The AC 500-series pronouncements will be approved for issue by the Accounting Practices Board and will have the same authority as the AC 100 series Statements of GAAP and AC 400 series Interpretations.
Most of the AC 300 - series Opinions have subsequently been withdrawn and the first two proposed AC 500 - series pronouncements are now being exposed for public comment. They are:
- ED 152 (proposed AC 500), Preface to the AC 500-series of Statements of Generally Accepted Accounting Practice.
- ED 153 (proposed AC 501), Accounting for Secondary Tax on Companies.
The following SA Draft Interpretations were issued and accepted as part of the AC 400 series:
- AC 427, Evaluating the Substance of Transactions in the Legal Form of a Lease (immediate effect).
- AC 428, Business combinations - "Date of Exchange" and Fair Value of Equity Instruments (immediate effect).
- AC 429, Disclosure - Service Concession Arrangements (immediate effect).
- AC 430, Reporting currency - Translation from Measurement Currency to Presentation Currency (effective 1/1/2002).
- AC 431, Revenue - Barter Transactions Involving Advertising Services (effective 1/1/2002).
- AC 433, Consolidation and Equity Method - Potential Voting Rights and Allocation of Ownership Interests (effective 1/1/2002).
The following SA Draft Interpretations are still outstanding:
q ED-SIC 432 - Intangible Assets - Website Costs.
q ED-SIC 434 - Financial instruments - Instruments or Rights Redeemable by the Holder.
As the IASB has indicated that it will not pursue finalisation of SIC D-34 (this Interpretation will be included in the improvements of IAS 32/39), it is unclear whether the AITF will continue to work on this Interpretation.
GAAP Monitoring Panel
The South African Institute of Chartered Accountants approved the principles of an arrangement with the JSE Securities Exchange to monitor financial statements of listed companies, with a view to taking action against companies which do not comply with the requirements of accounting standards.
Joint Disciplinary Task Team
In the light of the recent corporate failures, the SAICA, together with the Public Accountants and Auditors' Board (PAAB) recently joined forces to form a Joint Disciplinary Task Team to review the disciplinary process of the accountancy profession. The decision to form the task team was the result of the SAICA board's decision in 2001 to tighten up on the disciplinary processes of the profession.
The Task Team was given a broad mandate to review the current disciplinary processes of the two organisations in order to recommend improvements and harmonisation in the public interest. The mandate included consideration of the following specific issues:
- The ability to obtain and subpoena evidence and witnesses, both by a statutory body and a voluntary association.
- How the disciplinary needs of both SAICA and the PAAB can be met without double trials.
- The credibility of the process in the eyes of both the public and the members of both bodies.
- The acceptability of 'plea-bargaining' as a mechanism for improving the efficiency of the process.
- The optimum level of resources needed to be able to conduct the process effectively and the level of expenditure needed to sustain the process
- The appropriateness of sentences imposed by both bodies in the light of current society norms
- The composition of the committees taking into account the availability of volunteers and the trend towards longer and more complex hearings
- The increasing difficulty of proving cases and the adequacy of evidence
- If and how the processes can be accelerated.
The Task Team, which has been meeting since January 2002 has issued a final report to be considered by the respective boards of SAICA and PAAB.
In accordance with the recommendations of the task team, the report has been made available for the information of members.
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April 2002 Update
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The Accounting Practices Board (APB) in South Africa (SA) has a policy of
harmonising SA Statements of Generally Accepted Accounting Practice
(GAAP) with IAS.
With the exception of the effective dates of the Statements, all SA
Statements are similar to IAS.
At its October 2001 meeting the APB approved Statement of GAAP AC
137, Agriculture. This accounting statement is based on IAS 41,
Agriculture. The effective date of this statement is 1 January 2003. It is
expected that this accounting statement will impact the agricultural industry
to the extent that it sets out principles for the valuation of biological assets
and agricultural produce.
The following SA Exposure Drafts are still outstanding:
- ED 140: Report of Historical Financial Information to be Included in a Prospectus (No IAS).
- ED 152 (proposed AC 500) - Preface to the AC 500-series of Statements of Generally Accepted Accounting Practice.
- ED 153 (proposed AC 501) - Accounting for Secondary Tax on Companies.
Note, the Accounting Practices Committee (APC) is revising the process of issuing local Statements of Generally Accepted Accounting Practice (GAAP). As part of this process they intend to clean out the AC 300-series Opinions and, where required, replace such Opinions with an AC 500-series Interpretation. The AC 500-series pronouncements will be approved for issue by the APB and will have the same authority as the AC 100 - series Statements of GAAP and AC 400 - series Interpretations. Most of the AC 300 - series Opinions have subsequently been withdrawn and the first two proposed AC 500 - series pronouncements are now being exposed for public comment.
The following SA Draft Interpretations are still outstanding:
- ED-SIC 428 - Business Combinations - Measurement of Shares Issued
as Purchase Consideration
- ED-SIC 429 - Disclosure - Service Concession Arrangements
- ED-SIC 430 - Reporting Currency - Translation from Measurement
Currency to Presentation Currency
- ED-SIC 431 - Revenue - Barter Transactions Involving Advertising
Services
- ED-SIC 432 - Intangible Assets - Website Costs
- ED-SIC 433 - Consolidation and Equity Method - Potential Voting
Rights
- ED-SIC 434 - Financial Instruments - Instruments or Rights Redeemable by the Holder
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October 2001 Update
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The South African (SA) Accounting Practices Board previously issued AC 133, Financial Instruments: Recognition and Measurement, effective 1 January 2001. In a recent decision its effective date has been deferred and the Standard is now effective for years commencing on or after 01 July 2002.
The following SA Exposure Drafts are still outstanding:
- ED 135: Agriculture (IAS 41); and
- ED 140: Report of Historical Financial Information to be Included in a Prospectus (No IAS).
A proposed report (King II Report) suggesting enhancements to Corporate Governance practice in South Africa has also been recently issued for public comment.
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July 2001 Update
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Recently, the South African Accounting Practice Board (APB) approved AC 136, Accounting and Reporting by Post-Employment Benefit Plans, effective 1 June 2001, based on IAS 26.
The following Statements have also been revised in line with recent revisions to IAS, effective 1 January 2001:
- AC 102, Income Taxes (IAS 12);
- AC 116, Employee Benefits (IAS 19); and
- AC 133, Financial Instruments - Recognition and Measurement (IAS 39).
In addition, the APB has also recently approved the following Interpretations of SA Statements of GAAP:
- AC 419, Reporting Currency: Measurement and Presentation of Financial Statements under IAS 21 and IAS 29 - effective date 1 January 2001 (SIC 19); and
- AC 424, Earnings Per Share: Financial Instruments that may be Settled in Shares - effective date 18 April 2001 (SIC 24)
These Interpretations harmonise with the equivalent SIC.
The following South Africa Exposure are still outstanding:
ED 135: Agriculture (IAS 41); and
ED 140: Report of Historical Information to be Included in a Prospectus (no IAS). |
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May 2001 Update
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The Accounting Standards Board (ASB) in South Africa (SA) has a policy of harmonising SA Statements of Generally Accepted Accounting Practice (GAAP) with IAS.
SA Statements are similar to IAS, other than their effective date and often include increased disclosure requirements.
Recently, the ASB has approved the following Statements:
- AC 107: Contingencies and Post Balance Sheet Events - Effective Date 1/1/2001 (IAS 10);
- AC 116: Employee Benefits - Effective Date 1/1/2001 (IAS 19);
- AC 134: Accounting for Government Grants and Disclosure of Government Assistance - Effective Date 1/7/2000 (IAS 20); and
- AC 135: Investment Property - Effective Date 1/4/2001 (IAS 40).
- AC 136: Accounting and Reporting by Post-Employment Benefit Plans - Effective Date 01/06/2001 (IAS 26).
AC 102 (Income Taxes), AC 116 (Employee Benefits) and AC 133 (Financial Instruments) have also been revised in line with the recent changes to IAS 12, IAS 19 and IAS 39.
In addition, the ASB has also recently approved the following Interpretations of SA Statements of GAAP:
- AC 417: Equity - Costs of an Equity Transaction - Effective Date 1/8/2000 (SIC 17);
- AC 418: Consistency - Alternative Methods - Effective Date 1/7/2000 (SIC 18);
- AC 419: Reporting Currency: Measurement and Presentation of Financial Statements under IAS 21 and IAS 29 - Effective Date 01/01/2001 (SIC 19);
- AC 420: Equity Accounting Method - Recognition of Losses - Effective Date October 2000 (SIC 20);
- AC 421: Income Taxes - Recovery of Revalued Non-Depreciable Assets - Effective Date October 2000 (SIC 21);
- AC 422: Business Combinations - Subsequent Adjustment of Fair Values and Goodwill Initially Reported - Effective Date October 2000 (SIC 22);
- AC 423: Property, Plant and Equipment - Major Inspection or Overhaul Costs - Effective Date October 2000 (SIC 23);
- AC 424: Earnings Per Share: Financial Instruments that may be Settled in Shares - Effective Date 18/04/2001 (SIC 24); and
- AC 425: Income Taxes - Changes in the Tax Status of an Enterprise or its Shareholders - Effective Date October 2000 (SIC 25).
These Interpretations harmonise with the equivalent SIC.
The following SA Exposure Drafts are still outstanding:
- ED 135: Agriculture (IAS 41);
- ED 140: Report of Historical Financial Information to be Included in a Prospectus (no equivalent IAS);
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