Applying the 3-Stage Impairment Model to Intercompany Loans

IFRS 9 Financial Instruments became effective for periods beginning on or after 1 January 2018. IFRS 9 introduced the application of the “excpected credit loss” model which differs from the incurred loss model applied in terms of the previous standard, IAS 39 Financial Instruments. The excepted credit loss model is applicable to all financial assets subsequently measured at amortised cost or fair value through other comprehensive income. This applies to intercompany loans included in the separate financial statements.View PDF

Public Sector: Treatment of fully depreciated assets still in use (GRAP 17)

The Accounting Standards Board has during their March 2021 FAQ raised the issue surrounding fully depreciated assets still in use beyond their accounting useful life. The disclosure requirements of GRAP 3 must be applied irrespective whether the adjustment should be treated as a change in accounting estimate or an error.View PDF

The Protection of Personal Information Act (Popia) – Compliance

The South African Constitution gives every person the right to privacy, and the right to safeguarding of personal information. The Protection of Personal Information Act (POPIA) gives effect to this right. Here is what you need to know!View PDF

IFRS 3 Business Combinations – New definition of Business

The South African Constitution gives every person the right to privacy, and the right to safeguarding of personal information. The Protection of Personal Information Act (POPIA) gives effect to this right. Here is what you need to know!View PDF

Budget Highlights for 2021/22

The Minister of Finance delivered his budget speech on 24 February 2021. Due to Covid pandemic, tax relief were provided mainly for individual tax to assist in the recovery of the economy. The individual tax brackets were increased with the lowest tax rate of 18% applicable to income of R216 200 and the maximum marginal rate at 45% applicable to income above R1 656 601.View PDF

Auditor’s responsibility on JSE Listing Requirement 3.84(k) – CEO / CFO sign-off on internal financial control

The JSE Listing Requirement 3.84(k) requires the Chief Executive Officer (CEO) and the financial director (FD) to sign a responsibility statement that they have implemented the necessary internal financial controls to ensure the financial statements are fairly presented and no facts have been omitted or untrue statements made. The auditor has a responsibility to conclude whether this statement is inconsistent with the financial statements or with the auditor’s knowledge obtained during the audit.View PDF


SHARE CATEGORIES – Equity or Liability?

When buying equity shares in a company, one can purchase different category shares, namely ‘ordinary shares’ (also referred to as ‘common stock’) and ‘preference shares’ (also referred to as ‘preferred stock’). Shares represent equity in a company. However, in certain circumstances shares may have to be recognised as a liability in stead of equity. This tip will look at when shares are equity and when it represents a liability.View PDF

LIABILITY – YES or NO? Should it be accrued or provided for?

This tip deals with the principle that a contractual or a statutory obligation in itself does not necessarily gives rise to a liability. For example, an entity is obligated by law to pay income tax – however – in terms of accrual accounting principles, there is no obligation to pay tax unless income has been earned. The earning of the income is the past event that gives rise to the obligation to pay the tax. In this example, the liability is classified as a tax liability in accordance with IAS 12.View PDF

CEO / CFO signoff on internal financial control – JSE Listing Requirement 3.84(k)

To ensure a higher level of accountability from executive management, the JSE Listing Requirement 3.84(k) requires the CEO and the financial director to sign a responsibility statement that they have implemented the necessary internal financial controls to ensure the financial statements are fairly presented and no facts have been omitted or untrue statements were made View PDF

Disclosure of Director Remuneration – CIPC Notice 38 of 2020

All companies that are required to have their annual financial statements (AFS) audited and those that have their AFS voluntarily audited in terms of Section 30(2) of the Companies Act 71 of 2008, shall disclose directors’ or prescribed officers’ remuneration and other benefits paid, payable or receivable as per Section 30 (4)(5)(6) of the Act. View PDF

IFRS 16 Lease modifications

The last few months forced many entities to renegotiate lease terms and review their current lease agreements – the question arises how and when to account for a new lease when the lease terms and/or lease payments have changed, or where it was determined that it is not a new lease but a lease modification.View PDF

IFRS 7 Financial instrument disclosures

Despite being effective since 2007, entities often misinterpret the most basic requirements of IFRS 7. This tip deals with what‘s “HOT” and what’s “NOT” when it comes to disclosure of the significance of financial instrument for an entity’s financial position and performance.View PDF

8 Things you need to know about online advertising policies

The Advertising Policies apply to (1) ads and commercial…

Tangible assets carried at nil value but still in use

IFRS (IAS 16) requires the review of the useful life, residual value and depreciation method of asset items at least at each financial year-end. IFRS for SME (Section 17) requires such a review when factors have been identified that may indicate that the residua value or useful life of an asset has changed.View PDF

Covid-19-related rent concessions: Amendment to IFRS 16

The amendment is effective for financial periods beginning on or after 1 June 2020. Earlier application is permitted, including financial statements not yet authorised for issue at 28 May 2020. The amendment is also available for interim reports.View PDF

The Impact of Coronavirus on Financial Reporting and Preparers of the Annual Financial Statements

All preparers of Annual Financial Statements should consider the impact of the Coronavirus (COVID-19) on interim and annual financial statements.View PDF

The Impact of Coronavirus on Audits and the Considerations by Auditors

The auditor should be alert and apply professional scepticism regarding the potential for COVID-19 to give rise to possible financial reporting misstatements when fulfilling its responsibilityView PDF

IFRS 16 Leases: Transition choices

A lessee can choose to apply IFRS 16 through either a full retrospective approach or using a simplified approach. The simplified approach seems to provide some benefits to the preparers of financial statements when applying module 2.View PDF


An overview of Accounting Estimates (ISA 540)

The revised standard on Auditing Accounting Estimates has enhanced auditors’ responsibilities when auditing accounting estimates and its related disclosures. The revised ISA 540 applies to all audits for periods beginning on or after 15 December 2019. View PDF

Guidance on the IFRS 15 requirements relating to Contract Costs

Whilst IFRS 15 is primarily a standard on revenue recognition, it contains specific requirements relating to contract costs. Companies may therefore need to change their accounting for those costs on adoption of IFRS 15 for annual reporting periods beginning on or after 1 January 2018. View PDF

Approval of Company Financial Statements

The South African Companies Act has specific requirements on the approval of financial statements View PDF

Understanding low value assets

The IASB has developed IFRS 16 as a new leases Standard which supersedes IAS 17. A company is required to apply the new leases from 01 January 2019. View PDF

Classification of Cash Flows

Cash receipts and cash payments must be classified as operating, investing, or financing activities on the basis of the nature of the cash flow View PDF

Treatment of share premium in the Financial Statements

The Companies Act 71 of 2008 no longer permits companies to have shares of par value, resulting in companies no longer recognizing share premiums. In this issue we look at what this means for existing share premium accounts. View PDF

Governance and the role of Directors and Audit Committees

Corporate governance is essential to reduce risk within entities and to increase growth and long-term value for the business. View PDF

Implications of the effective dates of the IRBA Code on the auditor’s and assurance reports

As the effective date for Parts 1 and 3 of the IRBA Code differs from that of Parts 4A and 4B, it will have an impact on how the IRBA Code is described in the auditor’s and assurance reports. View PDF

Disclosure of Directors’ Remuneration in Group Companies

The Companies Act requires full disclosure of the remuneration of directors and prescribed officers (whether executive, non-executive or alternate directors) in the financial statements of companies that require an audit in terms of the Act. This requirement may become quite cumbersome where a Group of Companies consists of multiple companies. View PDF

Accounting for non-cash consideration in terms of IFRS 15

IFRS 15, Revenue from Contracts with Customers came into effect for years commencing on or after 1 January 2018, with many entities having fully adopted the new Standard at this point. One of the more practical issues which entities are likely to encounter is the accounting requirements for non-cash consideration. View PDF

Tips on how to successfully manage the transition to the new Lease Accounting Standard

IFRS 16 Leases comes into force for years commencing on or after 1 January 2019, which means that the transition date (the opening date of the comparative period) for December year ends has just passed. Bearing this in mind, if you have not yet started work on your IFRS 16 impact assessment, now is the time to start. View PDF


New standards and interpretations effective 1 January 2019 – Are you ready?

There has been a number of new standards and amendments issued by the IASB that will become effective from 1 January 2019 View PDF

Companies Amendment Bill 2018 – Proposed changes

On Friday, 21 September 2018 the Department of Trade and Industry published the draft Companies Amendment Bill 2018 for comment and comments closed on 20 November 2018. The following is a summary of the more significant changes proposed by the Bill. View PDF

IFRS 9: Financial Instruments – Restatement of Comparative Periods

The International Accounting Standards Board (IASB) have introduced a new accounting standard IFRS 9: Financial Instruments to replace IAS 39: Financial Instruments Recognition and Measurement. The standard is effective for annual periods beginning on or after 1 January 2018. The following are the principles behind the restatement of financial statements after adopting IFRS 9. View PDF

External Auditor’s Responsibility to consider Cybersecurity

One of the most complex and rapidly evolving issues which affect all entities is cybersecurity. This leads to the question of whether cybersecurity risk is relevant to the audits of financial statements. What is the auditor’s responsibility in respect of cybersecurity risk when planning and performing audits?View PDF

Use of eXtensible Business Reporting Language (XBRL) when submitting Annual Financial Statements online

The Companies and Intellectual Property Commission (CIPC) has introduced a new way of lodging the Annual Financial Statements (“AFS”) which must accompany the Annual Returns of a company. The CIPC has mandated submission of AFSs for qualifying reporting entities via XBRL as from 1 July 2018. View PDF

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


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


Disclosure of director remuneration

This newsletter is to provide guidance of the requirement of the disclosure of director remuneration in term of the Companies Act. View PDF

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


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 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