Best Accounting Practices

Update on Standards of GRAP

Erna Swart

Disclaimer

The views and opinions expressed in this presentation are those of the individual.

Official positions of the ASB on accounting matters are determined only

after extensive due process and deliberation.

Overview• Reporting Framework for 2013/2014

• Overview of latest pronouncements issued by ASB– Improvements to Standards of GRAP and

amendments to GRAP 23 (ED 112 and ED 113)– Changes in Measurement Bases following the

Initial Adoption of Standards of GRAP (ED 114)– Standard of GRAP on Statutory Receivables

(GRAP 108)

• Overview of other projects

GRAP Reporting Framework

Snapshot - Reporting framework30 June 2012 30 June 2013 30 June 2014

GRAP Improved Standards of GRAP & IGRAPs (2011)

Report in terms of new Standards: GRAP 21, 23, 24, 26, 103 and 104 (effective from 1/4/2012)

Report in terms of new Standards: GRAP 1, 3, 7, 9, 12, 13, 16,17,25,27,31 IGRAP 1, 16

IFRS/IPSAS

No IFRS 3(IFRS 4 and 6)

No change IFRIC 20

Not yet effective

Accounting policy (IFRS or GRAP): •GRAP 21, 26, 25, 104•GRAP 103 (voluntary)Accounting policy:•GRAP 105-107

Other Standards effective not yet effectAccounting policy (IFRS or GRAP:•GRAP 25Accounting policy:•GRAP 105-107DisclosureGRAP 20 or IPSAS 20

Accounting policy:•GRAP 105-107Disclosure:•GRAP 20 or IPSAS 20

Not applicable

No change No change GRAP 18

Reporting Framework for 2013/14

• GRAP Reporting Framework 2013/2014– New effective Standard

• GRAP 25 effective from 1 July 2013)

– Improvements 2012 (effective 1 July 2013)• Minor improvements affecting GRAP 1, 3, 7, 9, 12,

13, 16 and 17• GRAP 101 and GRAP 102 - revised and replaced

by GRAP 27 and 31• IGRAP 1 (revised) and IGRAP 16

Overview of latest pronouncements issued by

the ASB

Proposed Improvements to Standards of GRAP (ED 112)

• Bi-annual improvements to effective Standards of GRAP

• Minor non-urgent revisions

• Includes amendments to 6 new effective Standards of GRAP

• GRAP 5 and GRAP 100 excluded from Improvements project

Standards affected by improvements project

GRAP Standard Affected paragraphs

GRAP 1 Presentation of Financial Statements 11, 44, 44A-44D, 45A-45D, 46, 48, Appendix

GRAP 2 Cash Flow Statements Appendix

GRAP 3 Accounting Policies, Changes in Accounting Estimates & Errors

Appendix

GRAP 7 Investments in Associates Appendix

GRAP 10 Financial Reporting in Hyperinflationary Economies

01, 06, Appendix

GRAP 11 Construction Contracts Appendix

GRAP 13 Leases Appendix

GRAP 17 Property, Plant and Equipment 06, 08, 29

GRAP 19 Provisions, Contingent Liabilities & Contingent Assets

Appendix

Standards affected by improvements project

GRAP Standard Affected paragraphs

GRAP 21 Impairment of Non-cash-generating Assets

09, 09A, .10 -14, 17, 21, 22, 32, 76, 77,Appendix

GRAP 24 Presentation of Budget Information in Financial Statements

06, 22, Appendix

GRAP 25 Employee Benefits 08, 53, 123, Appendix

GRAP 26 Impairment of Cash-generating Assets

10, 10A, 11-15, 22, 25, 27, 79, 99, 119, Appendix

GRAP 31 Intangible Assets 73, 78, 85, 85A, 111, Appendix

GRAP 103 Heritage Assets 02, 03, 11, 16, 26, 27, 32A-B, 35, 53, 54, 55, 80-82

GRAP 104 Financial Instruments 84, 84A, 86, 88, Appendix

Proposed Amendments to GRAP 23 (ED 113)

• Mandatory recognition of services in-kind– to the extent that services received are

significant to an entity’s operations and/or service delivery objectives and recognition criteria is met

• Clarification that services in-kind are not limited to services provided by individuals but include right to use the assets

Proposed once-off change to measurement bases (ED 114)

• Proposal to allow entity to change its measurement bases from fair value or revaluation to cost method

• Once-off change when inappropriate accounting policy was elected on initial adoption of Standards of GRAP

• Limited effective date

Statutory receivables (GRAP 108)

• GRAP 108 applies to recognition, measurement and disclosure

• Statutory receivables – receivables that arises from legislation,

supporting regulations or similar means and– require settlement by another entity in cash or

another financial asset

• Can be an exchange or non-exchange transaction

Statutory receivables(GRAP 108)

• Initial recognition– At transaction amount– Apply either GRAP 9 or GRAP 23

• Subsequent measurement– Cost method– Reflect any interest or other charges accrued,

impairment losses or amounts derecognised

Overview of other projects

Post-implementation Review• Respondents to DP 5 requested the ASB to

consider whether any further simplifications could be made to Standards.

• ASB agreed that further changes can only be made by assessing users’ information needs.

• Review focuses on: – Whether users information needs met by GRAP

(limited to GRAP 16 and 17 as a pilot project)– Preparers comment on experiences in applying

GRAP Standards.

Post-implementation Review

• Project involves extensive consultation (in various ways) with users and preparers.

• Undertaken for 6 months, commencing end June/July.

• Results will be used to assess possible actions by the ASB, OAG or other entities.

Think Piece on Materiality

• Misunderstanding and misapplication of materiality.

• Results in a “compliance” culture rather than responding to users’ information needs.

• Paper focus on the following: – How ASB considers materiality in the standard

setting process– How preparers should consider materiality in

applying Standards of GRAP

Think Piece on Materiality

– How preparers should apply materiality when deciding on information to be disclosed.

– How auditors consider materiality in audit process.

Possible outcome may be a Standard issued by ASB, or a Guideline (or something similar) issued by the OAG

Contacts

• www.asb.co.za

• Info@asb.co.za

• 011 697 0660 (office)

• 011 697 0666 (fax)