NATIONAL PUBLIC ENTITIES FINANCIAL STATEMENTS TEMPLATE TRAINING NATIONAL TREASURY Presenter: Mr. John Watson, Director AS&R | 7 MARCH 2014

Program PE Consolidation Process AFS Template 3.Submission Deadlines 4.GRAP update 5.Year End Procedures 2013/14 6.Accounting Support during 2013/14 audit process 2

2014 PE Consolidation Process If we understand the WHY it will help us with the WHO, WHAT, HOW, WHEN and WHERE. PFMA Section 8 GRAP 6, 7 & 8 Auditor-General of South Africa Transparency 3

2014 PE Consolidation Process 4 TRANSPARENCY - Standard policies, understandable to users. SPO analysis on capital and financing position and expenditure COMPARABILITY - Convergence of accounting policies, useful to users ACCOUNTABILITY - Independent audit, scrutiny by Parliament and public COMPLETENESS - Consolidates all similar data, complete analysis to users

2014 Public Entity Consolidation Process 5 NT responsible for identifying entities to be included PFMA listed entities and unlisted entities Only institutions applying the accrual basis of accounting Consolidated Financial Statements in terms of GRAP Financial statements of each entity within the group –combined on a line by line basis –adding like items of assets, liabilities, net assets, revenue and expenses

2014 Public Entity Consolidation Process 6 BIG changes for AFS Template is based on 2013 but updated and enhanced 2.Inter-entity for current year and prior year 3.New conversion journals for current year and prior year 4.New Management sign-off template 5.New External Audit sign-off template 6.New requirements for entities with 30 June year end

2014 Public Entity Consolidation Process 7 1.AFS Template is based on 2013 but updated and enhanced –Aligned to published consol annual report for 2013 –Must enable macros or it will not work –Improved verification (red cells) –Includes new worksheets on Inter-entity Conversion Uncorrected misstatements

2014 Public Entity Consolidation Process 8 2. Inter-entity for current year and prior year –Why? GRAP requirement (GRAP 6.46) –Not the same as related parties –Includes prior period to have accurate comparatives –Entities should implement system to track transactions –Make use of supplier database / customer database –Share your information with other entities –Tested by external auditors –Different entities list for provinces (arranged with PAGs)

2014 Public Entity Consolidation Process 9 3. New conversion journals for current year and prior year –Why? GRAP requirement (GRAP 6.51) –Aligns entity’s normal AFS to Group Accounting Policies –Identify difference in accounting policy > journal entries –Journal per line items in the SCOA –If final AFS figures change > update your journal entries –NT will pass journals on final consolidation –Tested by external auditors

2014 Public Entity Consolidation Process New Management sign-off template –Why? PFMA requirement – 40(1)(b) / 55(1)(b) –Confirmation of compliance with NT instructions –Inter-entity complete, valid and accurate –Conversion journals complete, valid and accurate –Unadjusted audit misstatements recorded –External audit has tested the AFS template

2014 Public Entity Consolidation Process New External Audit sign-off template –Why? Do not need full audit opinion for consol purposes –Document discussed with AG and big 4 firms –Testing whether AFS template agrees to normal AFS –Testing inter-entity and testing conversion journals –Confirming unadjusted audit differences (misstatements) –Sign-off submitted to management of entity

2014 Public Entity Consolidation Process New requirements for entities with 30 June year end –Why? GRAP requirement (GRAP 6.48) –TB for 31 March 2014 (3 months + 9 months) –Management accounts OR financial statements for 12 months ended 31 March 2014 based on above trial balance –Material entities will be requested to obtain additional audit assurance on the management accounts / financial statements for 12 months. A separate communication to this effect will be sent out to these entities.

2014 AFS Template 13 Before you start working on your template know the following: 1.Template is 32bit 2.Must read the instructions and do things in right order 3.Workbook and worksheets are locked 4.Do not delete rows or columns or highlight cells 5.Fill in as much information as possible in the yellow cells 6.Remember to save your work

2014 AFS Template 14 Initial Questionnaire and Instructions

2014 AFS Template 15 Income & Expenditure Mapping

2014 AFS Template 16 Assets Mapping

2014 AFS Template 17 Liabilities Mapping

2014 AFS Template 18 Net Assets Mapping

2014 AFS Template 19 SCOA

2014 AFS Template 20 Calculation Sheets 1. CALC SHEET – NON-CURRENT ASSETS2. CALC SHEET – CURRENT ASSETS - Property, Plant and Equipment - Intangible Assets - Biological Assets - Investment Property (Cost/Fair Value) - Heritage Assets - Non-Current Receivables - Non-Current Investments - Trade and Other Receivables – Exchange - Cash and Bank - Inventories - Pre-Payments - Receivables from Non-Exchange Transactions - Finance Lease Receivables - Construction Contract Debtors 3. CALC SHEET – LIABILITIES4. CALC SHEET – EXCHANGE RECEIVABLES - Trade and Other Payables – Exchange - Finance Lease Obligations - Employee Benefits - Provisions - Long Term Borrowings - Exchange receivables

2014 AFS Template 21 Notes to the financial statements 1.Populated by SCOA and Calculation sheet amounts 2.Some note numbers have changed after alignment process 3.Complete all relevant yellow highlight areas 4.Check if note agrees to POS, PER, CFS or NA 5.Blue help button is there if need assistance

2014 AFS Template 22 Statement of Financial Position

2014 AFS Template 23 Statement of Financial Performance

2014 AFS Template 24 Statement of Changes in Net Assets

2014 AFS Template 25 Cash Flow Statement

2014 AFS Template 26 Inter-Entity

2014 AFS Template 27 Conversion Journals

2014 AFS Template 28 Uncorrected Misstatements

Submission deadlines MAY 2014 No.Document nameHard Copy Soft Copy (Electronic on CD) Due Date 1. GRAP AFS Template Printout of the following signed by management:  Statement of Financial Position  Statement of Financial Performance  Statement of Cash Flows  Statement of Changes in Net Assets MS Excel30 May Inter-entity templatePrintout signed by management MS Excel (Part of AFS Template) 30 May Conversion journalsPrintout signed by management MS Excel (Part of AFS Template) 30 May Annexure 7 - Remuneration of executive and non-executive management Printout signed by managementMS Excel (Not MS Word)30 May Certified AFS submitted for external audit Printout of complete document signed by management MS Excel preferably30 May Entities with different year ends – 12 months management accounts / financial statements Printout of complete document signed by management MS Excel (Not MS Word)30 May 2014

Submission deadlines JULY 2014 No.Document nameHard Copy Soft Copy (Electronic on CD) Due Date 1. Annexure C – Management Confirmation Signed original Scanned document (PDF) 31 July FINAL GRAP AFS Template Printout of the following signed by management:  Statement of Financial Position  Statement of Financial Performance  Statement of Cash Flows  Statement of Changes in Net Assets MS Excel31 July FINAL Inter-entity templatePrintout signed by management MS Excel (Part of AFS Template) 31 July FINAL Conversion journalsPrintout signed by management MS Excel (Part of AFS Template) 31 July FINAL Uncorrected MisstatementsPrintout signed by management MS Excel (Part of AFS Template) 31 July FINAL Audited annual financial statements Printout of complete document signed by management MS Excel preferably31 July Entities with different year ends – FINAL 12 months management accounts / financial statements (audited for some entities) Printout of complete document signed by management MS Excel (Not MS Word)31 July Annexure D – External Audit signoff on AFS Template Copy of signed original Scanned document (PDF) 31 July External auditor’s audit report on normal annual financial statements Copy of signed original Scanned document (PDF) 31 July 2014

Year End Procedure 2013/14 31 To be issued before 31 March 2014 Purpose is to remind: –Accounting Officers (AO) and Accounting Authorities (AA) of important financial year end procedures and closure/submission dates relating to the preparation and auditing of AFS and preparation of Annual Reports (AR). –AA of entities with a financial year end other than 31 March of important financial year end procedures and submission dates relating to preparation and auditing of AFS and preparation of AR.

Year End Procedure 2013/14 Annual Report Submission Dates ActionPFMADateResponsibility Reporting date55(1)(b)31/03Accounting Authority (AA) / Accounting Officer (AO) Submit approved financial statements and report of the accounting officer to relevant treasury and Auditor-General for Auditing 55(1)(c)(i) & (ii)30/05 ( final date) (Within 2 months after year-end) AA / AO Submission of audited financial statements As per the MCS31/07AA / AO Submission of annual report, annual financial statements and audit report to relevant treasury and the executive authority responsible for the public entity. 55(1)(d)29/08 (Within 5 months after year-end) AA / AO Executive authority to table in National Assembly or provincial legislature 65(1)(a)Within one month after the AA received the audit report Minister / MEC

Year End Procedure 2013/14 Due date for submission to: OAGALM (if applicable) Unaudited financials Copies: 30/05/ /05/ Audited financials Copies: 31/07/ /07/ Annual Reports Copies: 29/08/ /06/2014 1

34 Year End Procedure 2013/14 Confirmation Letters: Submission of AFS –Accounting Authority (AA) / Accounting Officer (AO) accepts responsibility for the accuracy & fair presentation of the AFS submitted to AG & relevant treasury Submission of Annual Report incl. Performance Information –AA/AO accepts responsibility for the accuracy & fair presentation of the AFS & PI submitted to AG & relevant treasury –AGSA will review the contents of the AFS for consistency

35 Year End Procedure 2013/14 Performance Information to Auditors: The performance information in the annual report –Needs to be submitted for audit purposes on 30 May 2014 –External Auditor’s PFMA deadline is 31 July 2014.

36 GRAP Update REPORTING FRAMEWORK AT A GLANCE (DIRECTIVE 5) 2011/ / /2014 Improved Standards of GRAP & IGRAPs New Standards that became effective: GRAP 21, 23, 24, 26, 103 and 104 New Standards become effective: GRAP 25: Employee Benefits Early Adopt GRAP 21, 23, 24, 26, 103 Accounting Policy: GRAP 25, 104 – 107 Accounting Policy: GRAP 25, 105 – 107 Accounting Policy: GRAP 25, 105 – 107

GRAP Update Nature of difference IAS 19GRAP 25Impact Actuarial gains and losses Allows the deferral of actuarial gains and losses using the “corridor method” Requires full recognition of actuarial gains and losses in surplus or deficit in the year they occur No longer an option available on recognition of actuarial gains and losses, everything is recognised immediately in surplus or deficit when they occur Past service costs Requires the recognition of past service cost on a straight-line basis over their vesting period, in surplus or deficit Requires full recognition of past service cost in the year they arise No more deferral of service cost over the vesting period, everything is recognised immediately in surplus or deficit when they arise Discount rate used to measure the defined benefit liability The discount rate is determined by reference to yields on high- quality corporate bonds Requires that the discount rate be determined by reference to yields on government bonds Use government bond rates Employee Benefits previously accounted for in terms of IAS 19 however since 1 April 2013 required to account for in terms of GRAP 25, unless early adopted.

Accounting Support during 2013/14 audit process 38 Name of OAG representative within NTProvinceCluster Star Kafu Telephone: KZN & NWJustice Thomas Matjeni Telephone: GPSocial Services John Watson Telephone: NC & FSEconomic Services Keitumetse Malebye Telephone: / EC & MPFinance & Admin Thokozile Motsweni Telephone : WCCentral Government Lizette Labuschagne Telephone : LPNRF

THANK YOU 39