Annual Report 2011

Constitution Public Audit Act Public Finance Management Act Other legislation Minister of Finance Establishment and operations National Treasury Auditor-General

 Constitution requires measures to ensure:  Transparency  Expenditure control  PFMA Chapter 11 established Board  Executive Authority = Minister of Finance  ASB regulations issued? By Minister  Juristic person  Own operating procedures  Funded  National Treasury transfer payment Establishment and operations cont’d… by introducing GRAP

 Promote transparency  Effective financial management  Set Standards of GRAP (PFMA s89)  Publish guidelines & directives  Recommend implementation dates  Standards of GRAP =  Standards & Interpretations  Directives  Guidelines Functions of the Board REAL

 Set Standards of GRAP for: - Departments - Trading Entities from Public Entities since Constitutional Institutions since Municipalities & their entities cities 2008 | others Parliament and legislatures since 2010  GBEs apply IFRS Functions of the Board cont’d…

 10 appointed by Minister after consultation with AGSA  Appropriate mix of skills AGSA | OAG | Audit firms | municipalities national/provincial government | others  Chairperson  Individual capacity, except AGSA & OAG  Non-executive | independent | part time  Meeting attendance remuneration determined by Minister Board members

Board Secretariat Project groups Project groups Audit Committee Audit Committee Management Committee Management Committee Role of Accounting Authority Role of Standard Setter Shared with National Treasury External parties Not remunerated Internal structure

Minister of Finance National Treasury National Treasury Auditor-General Representation on Board & Trilateral Representation on Board & Trilateral Audit against Standards of GRAP Implement Standards of GRAP Approve effective dates for Standards of GRAP Set Standards of GRAP Interaction with key role players 1

How do we set Standards?

Phase I - Research and develop proposed Standard Phase II - Focused Stakeholder consultation & amendments to proposed Standard Phase IV - Public consultation Phase III - Approve Exposure Draft Phase V - Focused consultation on comments & amend Standard Phase VI - Approval of Standard Phase VII - Consult on effective date Propose effective date Develop transitional provisions - Secretariat - Project groups (technical & subject experts) - Workshops & Roundtables (treasuries, professional bodies, PAGs, CFO Forums) - Board (AGSA and OAG represented) -Trilateral parties Phase VIII – Application & implementation (ASB: accounting forum, FAQs, review and amendment (improvements project) - Secretariat Standard setting process - Project groups (technical & subject experts) - Board (AGSA and OAG represented)

 Use pronouncements by national & international standard setters  PFMA requires ASB to consider: –best accounting practices –capacity of relevant institutions  ASB also considers: –RSA legislative framework –recent developments in pronouncements Setting Standards of GRAP cont’d…

Develop an ED of a proposed Standard of GRAP Is there an existing IPSAS? Is there an existing IPSAS? Yes No Is there an existing IFRS? Is there an existing IFRS? Consider any improvements made by the IASB to the relevant IFRS; legislation & local circumstances; reduce complexity YesNo Develop Exposure Draft (ED) of a proposed Standard of GRAP Develop a Discussion Paper (DP) Develop a Discussion Paper (DP) Setting Standards of GRAP cont’d…

 GRAP based on IPSAS or IAS  Amendments to IPSAS when: –revision of international standards –fundamental issues –alternative treatments in international or national standards –statutory authority –disclosure requirements –simplification Setting Standards of GRAP cont’d…

 Develop core set of Standards  Representation of stakeholders on project groups to advise on development of ED  Insufficient material available?  Project group assists DP development  ED based on comments / input on DP Setting Standards of GRAP cont’d…

How do we determine our Standard-setting agenda?  Consultation with Minister  develop a “core” set of Standards  Feedback from stakeholders  Ongoing assessment with trilateral parties ASB | OAG | AGSA  Monitor international developments IPSASB | IASB Setting Standards of GRAP cont’d…

Who has adopted so far?

Adoption of our Standards EntityFrameworkDate National and provincial departments Modified cashAdoption pending implemented of IFMS National and provincial agencies AccrualSince April 2009 Previously applied local equivalent of IFRSs Parliament and provincial legislatures AccrualSince 1 April 2010 Previously applied modified cash Legislatures – accrual and modified cash Varied Previously applied modified cash Municipalities and their entities AccrualSince 1 July 2008/2009 Previously applied fund accounting Full compliance expected for all by 30 June 2012

Standards of GRAP applies to:  Departments National and Provincial  Public Entities  Constitutional Institutions  Trading Entities as defined in the PFMA  Municipalities, boards, commissions, companies, corporations, funds, entities under ownership control  Parliament and provincial legislatures Application of reporting frameworks

Statements of GAAP are GRAP for:  Government Business Enterprises [GBEs] as defined in the PFMA  Any other entity whose ordinary shares, potential ordinary shares or debt are publicly tradable except a municipality  Entities under ownership control of above Application of reporting frameworks cont’d…

Progress to date…

 Standards  32 approved by Board  5 awaiting approval by Minister  16 Interpretations  1 Guideline  9 Directives Pronouncements to date

Current work programme

 Public sector specific financial instruments  GRAP for GBEs  Principal-agent activities  Living and other naturally occurring resources  Public Private Partnerships  Post implementation reviews Local projects

 Conceptual framework  Financial statement discussion & analysis  Long term sustainability of an entity’s finances  Service performance information  GFS International projects

Thank you