New accounting developments and proposed amendments

The IASB has recently issued a number of papers with proposed amendments to reporting standards. Although these amendments are not yet finalised it is important to take note of these proposed changes.

Disclosure Initiative

The ‘disclosure problem’ includes the following three main concerns about disclosures in the financial statements:

  • Not enough relevant information – this could lead to investing or lending decisions
  • Irrelevant information – this can obscure relevant information and reduce understandability
  • Ineffective communication – this can reduce understandability of financial statements

Proposed amendments

The preliminary proposed developments include the following:

  • Development of disclosure principles either in amendments to IAS 1 or in a new general disclosure standard
  • Development of principles of effective communication that entities should apply when preparing the financial statements (either in a general disclosure standard or issued as non-mandatory guidance)
  • The general disclosure standard should:
    o specify that the ‘primary financial statements’ are the statements of financial position, financial performance, changes in equity and cash flows;
    o describe the role of primary financial statements and the implications of that role
    o describe the role of the notes and include the guidance on the content of the notes
    o include a principle that an entity can provide information that is necessary to comply with IFRS Standards outside financial statements if the information meets the necessary requirements
    o any specific information that is inconsistent with IFRS should be required to be identified or should be prohibited from being included in the financial statements

IFRS 9 Financial Instruments

IFRS 9.B4.1.11(b) states that the prepayment of a debt instrument at an amount that includes ‘reasonable additional compensation’ for the early termination of the instrument results in contractual cash flows that are solely payments of principal and interest on the principal amount outstanding. The issue is whether the term ‘compensation’ includes negative compensation, i.e. where the party exercising the option receives compensation from, as opposed to paying compensation to, the other party for early termination.

Proposed amendment

The proposed amendment includes a narrow-scope exception to IFRS 9 to allow a prepayable financial asset to be measured at amortised cost if:

 the financial asset would otherwise meet the requirements of IFRS 9.B4.1.11(b) but fails it only because the option holder may receive reasonable additional compensation for early termination; and
 the fair value of the prepayment feature is insignificant when the entity initially recognises the financial asset.

IFRS 8 Operating Segments

Proposed amendments

The following amendments have been proposed:

  • emphasise that the chief operating decision maker is a function that makes operating decisions and decisions about allocating resources to, and assessing the performance of, the operating segments of an entity;
  • add to the existing requirements an explanation that the chief operating decision maker may be either an individual or a group;
  • explain the role of non-executive members when identifying an entity’s chief operating decision maker;
  • require the disclosure of the title and description of the role of the individual or the group that is identified as the chief operating decision maker;
  • require an explanation in the notes to the financial statements when segments identified by an entity differ between the financial statements and other parts of its annual reporting package;
  • add further examples of similar economic characteristics to the aggregation criteria in paragraph 12A of IFRS 8;
  • clarify that an entity may disclose segment information in addition to that reviewed by, or regularly provided to, the chief operating decision maker if that helps the entity to meet the core principle in paragraphs 1 and 20 of the Standard; and
  • clarify that the explanations of reconciling items shall be given with sufficient detail to enable users of financial statements to understand the nature of the reconciling items.

Indyebo and Nexia SAB&T tie the knot!

Centurion,   Gauteng,   27   February   2017   –   Representatives    from    Nexia    SAB&T    and    Indyebo,   announced   today   that   the   two   companies  will  be  merging  effective  1  March  2017.  The  business  will  continue  to  trade  under  the  Nexia  SAB&T  brand,  to  emphasise  its ties to the 10th largest international network in the sector, Nexia International.

Nexia  SAB&T  is  a  top  ten  audit,  accounting  and  consulting  professional  services  provider,  with  a  history  that  dates  back  to  the  birth  of  democracy   in   South   Africa,   having   been   founded in 1994. Nexia SAB&T has always strived to reflect the demographics of the country in its ownership structure, while providing a service to its clients that is inspired by a vision to be “Closer to you!”

Indyebo is a progressive Black female owned firm that offers assurance, advisory and consulting services and has an outstanding reputation for quality, excellence and integrity.

The merger has come about as a natural development out of several projects undertaken by Nexia SAB&T and Indyebo  jointly.  Nexia  SAB&T  has  long  identified  Indyebo  as  a  candidate  for  its  enterprise  development  initiatives and as such shared a long and mutually beneficial shared relationship with Indyebo over the years. With  the  other  Black  owned  assurance  provider  firms  in  the  market  having  experienced  growth  in  the  past  years, this merger will see Nexia SAB&T solidifying its position among South Africa’s top ten audit firms as well as, as one of the premier Black empowerment firms.

Nexia  SAB&T  is  truly  a  multi-disciplinary  professional  service  provider,  with  a  wide  range  of  services  and  accreditations in the audit, accounting and consulting fields. These include JSE accreditation for the conduct of audits  of  listed  entities,  a  national  footprint  with  offices  in  each  of  South  Africa’s  nine  provinces  and  experience in the private and public sector at all levels.

Bashier  Adam,  CEO  and  founder  of  Nexia  SAB&T  explained  the  new  direction  of  the  merged  company  as  follows:  “This  merger  is  in  line  with  Nexia  SAB&T’s  vision  to  entrench  itself  as  a  top  Black  empowerment  professional services firm in South Africa. We have no doubt that the addition of Indyebo and particularly Ms Ndumi Medupe will go a long way to achieving this!”

Indyebo has experienced highs and lows since its inception in 2007 and with the enhanced capacity brought about  through  the  merger  with  Nexia  SAB&T,  is  now  ready  for  bigger  challenges.  This  includes  exposure  to  JSE Listed Assurance Services and a national footprint.

Ndumi Medupe, CEO and founder of Indyebo expressed enthusiasm for the merger: “By merging with Nexia SAB&T  we  will  attract  clients  in  new  sectors  and  geographical  locations  to  create  a  formidable  professional  services firm in SA. I believe the market is ready for strong, empowered brands and this merger will solidify the firm’s position. These are truly exciting times.”

The  “new”  Nexia  SAB&T  is  set  to  continue  to  chart  a  course  that  sees  it  living  its  vision  of  being  “Closer  to  you”  through  professional  services  that  provide  strategic,  innovative,  resource  management  advice  to  its  clients.

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In March 2017 Ndumi Medupe was elected as Chairperson of Nexia SAB&T by the entire board of directors. Meet the new Chairperson here.