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Update on South African GAAP

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09 Jul 2003

An accounting update for South Africa as of July 2003.

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 Accounting Practices Committee (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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