2018

Revised Conceptual Framework for Financial Reporting

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

Submission of Company Annual Financial Statements and Penalties for Non-compliance

Section 30 of the Companies Act, Act 71 of 2008, requires a company to prepare annual financial statements within six months after the end of its financial year. View PDF

Identifying if a Revenue or Purchase Transaction contains a financing element

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

Tax implications for Cryptocurrency

A cryptocurrency is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets. View PDF

Things to consider with the VAT increase

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

Using Data Analytics in Audits

Data Analytics is the process of inspecting, cleansing, transforming and modelling raw data with the purpose of discovering useful information, drawing conclusions and supporting decision making. View PDF

Tax compliance for Small Businesses

Many SMEs face tax-related regulatory burden, and there is little doubt that navigating through all the tax requirements can be a daunting. Tax is levied on income and profit received by a taxpayer, which includes individuals, companies and trusts. View PDF

2017

New standards and interpretations effective 1 January 2018 – Are you ready?

There has been a number of new standards and amendments issued by the IASB that will become effective from 1 January 2018. View PDF

IFRS 9 Impairments – Interim and Transitional arrangements applicable to Banks

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

Making Materiality Judgements – Practice Statement 2

The IFRS Practice Statement 2 was issued in September 2017 by the IASB to provide companies with guidance on making materiality judgements when preparing financial statements. The practice statement is non-mandatory guidance and is aimed at promoting greater application of judgement. Companies are permitted to apply the guidance in the Practice Statement to financial statements prepared any time after 14 September 2017. View PDF

Revenue recognition – how to account for free gifts and loyalty programmes

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

VAT on Non-Executive Director Fees

The South African Revenue Service (SARS) has ruled in Binding General Ruling (BGR 41), that non-executive directors (NEDs) should register and account for VAT on their directors’ fees where the fees exceed the VAT registration threshold of R1 million in a 12-month period. BGR 41 was made effective from 1 June 2017. View PDF

IFRIC 22 - Foreign Currency Transactions and Advance Consideration

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

IFRIC 23 – Uncertainty over tax treatments

IFRIC 23 Uncertainty over tax treatments issued in June 2017 provides clarification on the recognition and measurement requirements in IAS 12 Income Taxes when there is uncertainty over income tax treatments. View PDF

IFRS 17 – Insurance Contracts

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

Determining of other information for audit reporting ISA 720 (revised)

A variety of reporting requirements and voluntary reporting practices exist in South Africa, which may give rise to the inconsistent application of ISA 720 (Revised). The auditor has certain responsibilities under ISA 720 (Revised) when other information has been identified in an entity’s annual report. View PDF

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. View PDF

Public sector: Treatment of fully depreciated assets still in use

The treatment of fully depreciated assets is a contentious issue in the public sector space. Many public sector entities utilise assets beyond their accounting useful lives because of issues such as budget constraints. This article highlights the main issues surrounding fully depreciated assets and how the Accounting Standards Board (ASB) has set out to address these issues. View PDF

Responding to Non-compliance with Laws and Regulations

Responding to Non-compliance with Laws and Regulations is an international ethics standard for auditors and other professional accountants. It sets out a first-of-its-kind framework to guide professional accountants in what actions to take in the public interest when they become aware of a potential illegal act, known as non-compliance with laws and regulations, or NOCLAR, committed by a client or employer. View PDF

2016

Amendments becoming effective 1 January 2017

Amendments becoming effective 1 January 2017. View PDF

Interest-free loans to Trust

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

King IV Report

The fourth revision (King IV) was already published for public comment during March 2016 and is expected to be released soon. View PDF

Reporting on Going Concern

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

Reporting of key audit matters in the audit report

In 2015 the IAASB issued the new ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report. This Standard will become applicable for all audits of financial statements ending on or after 15 December 2016 View PDF

Amendments to IFRS 15 Revenue from Contracts with Customers

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

Amendments to IFRS 2 - Classification and Measurement of Share-based Payment Transactions

This newsletter is to give an insight to the new published guidance on the treatment of cash settled share-based payments per IFRS 2. View PDF

IFRS 16 Leases

IFRS 16 replaces IAS 17 and all related interpretations, and completes the IASB’s project to improve the financial reporting of leases. View PDF

2015

Frequently asked questions

The technical department receives many requests for technical assistance during the year. This month’s Tip summarises some of the frequently asked questions. View PDF

IFRS 9 Financial Instruments: Hedge accounting

Phase 3 of the IFRS 9 project provides requirements for hedge accounting which aligns hedge accounting more closely with risk management, establishes a more principles-based approach to hedge accounting and addresses inconsistencies and weaknesses in IAS 39’s hedge accounting model. View PDF

IFRS 9 Financial Instruments: Impairment

Phase 2 of the IFRS 9 project lays out the impairment requirements related to the accounting for expected credit losses on the entity’s financial assets and commitments to extend credit. View PDF

IFRS 9 Financial Instruments: Classification and measurement

The IASB’s IFRS 9 Financial Instrument project aimed to replace IAS 39 was done in 3 phases: Classification and Measurement, Impairment, and Hedge Accounting. This month we focus on the first phase, classification and measurement. View PDF

Statement of Cash Flows

The objective of a Statement of Cash Flows is to provide useful information on how an entity generates and utilizes cash in respect of historical changes in the cash and cash equivalents. View PDF

IFRS for SME's

Limited amendments to IFRS for SME’s have been made after consideration of feedback received during the initial comprehensive review performed by the IASB. View PDF

Promotion of Access to Information

The PAIA came into effect in 2000 to give effect to the constitutional right of access to any information held by the state, as well as information held by another person that is required for the exercise or protection of any right. View PDF

Tax Matters

Reportable arrangements are arrangements perceived to have characteristics that may lead to undue tax benefits. A number of new transactions to be regarded as reportable arrangements were published during March 2015. View PDF

IFRS 15

IFRS 15 is a hot topic as we move closer to the effective date* for implementation. This month’s Tip is a reminder of the principles and implications of the new standard. View PDF

Disclosure Initiatives

The final Standard Disclosure Initiative (Amendments to IAS 1) was published in December 2014. The amendments aim to improve the presentation and disclosure in IFRS. View PDF

2015 / 2016 Budget Highlights

This month’s newsletter focuses on the budget 2015/2016 and the impact on you. View PDF

New Auditor's Report

Investors and other stakeholders have been requesting that for the purpose of public interest auditors need to provide greater transparency about the audit.View PDF