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 framework 30 June June June 2014 GRAPImproved 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 changeIFRIC 20 Not yet effective Accounting policy (IFRS or GRAP): GRAP 21, 26, 25, 104 GRAP 103 (voluntary) Accounting policy: GRAP Other Standards effective not yet effect Accounting policy (IFRS or GRAP: GRAP 25 Accounting policy: GRAP Disclosure GRAP 20 or IPSAS 20 Accounting policy: GRAP Disclosure: GRAP 20 or IPSAS 20 Not applicable 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 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 StandardAffected paragraphs GRAP 1Presentation of Financial Statements11, 44, 44A-44D, 45A- 45D, 46, 48, Appendix GRAP 2Cash Flow StatementsAppendix GRAP 3Accounting Policies, Changes in Accounting Estimates & Errors Appendix GRAP 7Investments in AssociatesAppendix GRAP 10Financial Reporting in Hyperinflationary Economies 01, 06, Appendix GRAP 11Construction ContractsAppendix GRAP 13LeasesAppendix GRAP 17Property, Plant and Equipment06, 08, 29 GRAP 19Provisions, Contingent Liabilities & Contingent Assets Appendix

Standards affected by improvements project GRAP StandardAffected paragraphs GRAP 21Impairment of Non-cash-generating Assets 09, 09A, , 17, 21, 22, 32, 76, 77,Appendix GRAP 24Presentation of Budget Information in Financial Statements 06, 22, Appendix GRAP 25Employee Benefits08, 53, 123, Appendix GRAP 26Impairment of Cash-generating Assets 10, 10A, 11-15, 22, 25, 27, 79, 99, 119, Appendix GRAP 31Intangible Assets73, 78, 85, 85A, 111, Appendix GRAP 103Heritage Assets02, 03, 11, 16, 26, 27, 32A-B, 35, 53, 54, 55, GRAP 104Financial Instruments84, 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

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