South Africa adopts IASB's SME proposal as GAAP for SMEs
04 Oct 2007
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
- SAICA Frequently Asked Questions Document (PDF 68k). The Circular covers such matters as entities eligible to use the Statement, reasons for adopting the Statement, due process steps, 'some areas to be aware of in applying the Statement', and audit reporting considerations.
- SAICA Frequently Asked Questions Document (PDF 179k). Note that this document will be updated from time to time. Check the SAICA Website for updates.
- Cover Letter Sent to all SAICA Members (PDF 100k)
- SAICA Press Release (PDF 47k)
- Link to SAICA Website
