Botswana
- National Professional Organisation Website: Botswana Institute of Accountants
- Response to IFAC Member Body Survey on Standard Setting and Regulation
- World Bank ROSC Accounting and Auditing Report.
Financial Reporting Framework in Botswana
The information below is selected excerpts from the World Bank's Report on the Observance of Standards and Codes (ROSC) - Accounting and Auditing for Botswana as of 20 May 2006. Footnotes have been omitted.
Botswana's statutory framework for accounting and auditing5. The Companies Act (Cap 42:01) requires all companies incorporated in Botswana to prepare annual financial statements. The Companies Act provides requirements for preparation, presentation, and publication of financial statements, disclosures, and auditing for the companies incorporated under the Act. The Act prescribes the basic contents and form of financial statements, and it requires that the financial statements of the companies, except private limited companies meeting certain thresholds, be audited annually. The Act does not specifically limit the eligibility of auditors only from the membership of the Botswana Institute of Accountants (BIA). However, in practice, the BIA members who have a valid practicing certificate undertake audits for the most part. The Companies Act requires consolidated financial statements to be prepared by the group companies. But it relaxes this requirement on the condition when the directors are of the opinion that 'it is impracticable or would be of no real value to the members of the company' or 'the result would be misleading or harmful to the business of the company or any of its subsidiaries'. This may result in possible accounting policy manipulations, resulting in departure from international best practice when preparing consolidated financial statements.... 7. There is no legal mandate for the application of IFRS and ISA. The legislative enactments, including the Companies Act and the Banking Act, do not mandate the application of IFRS and ISA with regard to preparation and audit of financial statements of corporate entities. However, the publicly traded companies and banks prepare the financial statements claiming to follow IFRS and auditors claim that they follow ISA. The Insurance Industry Regulations requires that insurance companies follow 'recognized international accounting standards', without mentioning the issuing authority of such standards. The Government of Botswana is in the process of enacting a revised Companies Act, which is expected to mandate the application of IFRS and ISA for the entities incorporated in Botswana.... 18. Botswana Stock Exchange listing requirements require presentation of interim financial statements. As per the listing requirements, listed companies must present unaudited quarterly financial results according to a prescribed format and must be circulated among the shareholders. The listed companies are also required to submit their annual financial statements, prepared in accordance with IFRSs and audited in accordance with ISAs. |
IFRS for SMEs in Botswana
In September 2009, the Council of the Botswana Institute of Accountants adopted a Resolution on the IFRS for SMEs (PDF 65k). The resolution states:
| In July 2009, the International Accounting Standards Board (IASB) finally issued the long awaited IFRS for SMEs. This standard takes immediate effect. Without doubt this is a welcome development in the profession in Botswana especially in view of the fact that Botswana has legislated compliance with full IFRS through the Companies Act 2003. The SMEs standard will significantly reduce the compliance burden for companies in Botswana and it is going to be the reporting framework for more than 90% of the companies in Botswana. |
Under the resolution:
- Public companies must use full IFRSs.
- Companies with assets greater than P5,000,000 (about US$700,000) or turnover greater than P10,000,000 (about US$1,400,000) must use full IFRSs.
- Public Interest Entities (PIE) as defined by BIA must use full IFRSs. These are:
- An entity that takes deposits or loans from the public except in circumstances incidental to its primary business.
- An entity that offers its shares or debt to the public.
- An entity that is a Parastatal or other non Government organisation that is funded by Government through a subvention or a similar form of funding arrangement.
- An entity that holds assets in a fiduciary capacity for a broad group of outsiders, such as a bank, insurance company, securities broker/dealer, pension fund, mutual
- fund or investment banking entity except in circumstances incidental to its primary business.
- An entity that is economically significant in Botswana (quantitative guidlines are provided, including greater than 100 employees).
- All other entities may apply the IFRS for SMEs except where the entities are required by legal provisions or other regulations to comply with a specific financial reporting framework other than the IFRS for SMEs.