SAB&Tips

The IASB has recently published its revised ‘Conceptual Framework for Financial Reporting’. The project was initiated in 2004 however due to a series of changed priorities and abandonment in 2010 followed by a phase by phase approach, the resultant framework does not constitute a substantial revision as was originally intended, but instead focuses on topics that were not yet covered or that showed obvious shortcomings that needed to be dealt with. The Board and Interpretations Committee will immediately begin using the revised Framework. It is effective for annual periods beginning on or after 1 January 2020 for preparers that develop an accounting policy based on the Framework. View PDF

There are different interpretations as to when one should “discount” revenue or purchases. There are two totally different views - the first one being that discounting begins on the day after the recognition of a sale or purchase and the second one allows for the concept of “extended payment terms” beyond “industry norms”. Note: This does not apply to debtors or creditors. View PDF

As of 1 April 2018, the effective VAT rate will rise from 14% to 15%. There are important aspects to consider as a result of the increase. The VAT rate to apply to transactions depends on the “time of supply rules”. This is the date on which the transaction is deemed to occur according to the VAT Act. The general time of supply rule is the “earlier” of when (a) an invoice is issued or (b) payment is received. View PDF

IFRS 9 will become effective on 1 January 2018 and represents a fundamental change in the impairment of financial instruments. This will have a significant impact on how banks are required to calculate provisions for credit losses (impairments). The South African Reserve Bank (SARB) issued Directive 5 as a transitional arrangement and to provide clarity to banks in South Africa on how to categorise expected credit loss provisions. The transitional arrangement only applies to new provisions that did not exist prior to the adoption of the expected credit loss model. View PDF

IFRS 15 includes specific requirements related to “customer options for additional goods or services” – for example free gifts, discount vouchers, etc - and requires a distinction to be made as to whether this option confers a “material right”. We will look at what is a “material right” and how do you make this assessment. View PDF

IFRIC 22 Foreign Currency Transactions and Advance Consideration clarifies the accounting for transactions that include the receipt or payment of advance consideration in a foreign currency. IFRIC 22 is effective for annual periods beginning on or after 1 January 2018. View PDF

IFRS 17 Insurance Contracts which establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts have been issued in May 2017. IFRS 17 supersedes IFRS4 and is effective for annual periods beginning on or after 1 January 2021. View PDF

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. View PDF

The 2016 draft Taxation Laws Amendment Bill introduced a new section - Section 7C - to the Income Tax Act which provides detail and measures to prevent Estate Duty and Donations Tax avoidance through the transfer of assets to a Trust on interest-free loan accounts. View PDF

In 2015 the IAASB issued revisions to ISA 570, Going Concern. The revised Standard will become applicable for all audits of financial statements ending on or after 15 December 2016 View PDF

This newsletter is to give an insight to the new published guidance adding clarification to certain areas of the Standard as well as guidance on practical expedients. View PDF