2018
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.
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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?
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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.
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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.
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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.
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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.
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2017
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.
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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.
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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.
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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.
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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.
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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.
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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.
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2016
2015
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.
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