1. Update on Standards of GRAP July 2019

2. 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.

3. Overview
A three-year reporting landscape.
New developments.

4. Reporting frameworks – 2018 to 2020
Effective 1 July 2018
Effective 1 July 2019
Effective 1 July 2020
Mandatory
Voluntary
Improvements 2016
IGRAP 18
GRAP 20
GRAP 34 to 38
GRAP 18
GRAP 21 and 26
IGRAP 19
GRAP 32
GRAP 110
Guideline on Housing Arrangements
GRAP 108
IGRAP 20
GRAP 109
IGRAP 17, 18, 19, Guideline on Housing
IFRIC 22

5. Key changes Period Change 2018/19 Impairment of assets 2019/20
Accounting for land
Accounting housing arrangements
Statutory receivables
Service concession arrangements

6. At a glance Standard What to consider? GRAP 21 and GRAP 26
Impairment of cash and non-cash generating assets
Designate assets as cash or non-cash generating on initial recognition of asset (or adoption of changes).
CG = generate commercial return = positive cash flows from continuing use and disposal that are significantly higher than the cost.
Not an ongoing assessment – initial recognition or when use of asset changed.
Dual purpose assets
If unsure NCG.
Non-cash generating asset can be network.
Apply prospectively.

7. At a glance Standard What to consider? Guideline
Accounting for arrangements in terms of National Housing Programme
Decide if functions are that of project manager or contractor.
Change to what revenue, expenses, assets and liabilities recognised in the financial statements.
IGRAP 18
Recognition and Derecognition of Land
Recognition based on control, not legal title  need to assess all arrangements. NB: Land not buildings.
Examples: land used in national housing programme, arrangements with public works as custodian, arrangements with others for use of land.
Transition – Prospective adjustment to land controlled on effective date.

8. At a glance Standard What to consider? IGRAP 19
Liabilities to Pay Levies
Levies = non-exchange transactions imposed by government on entities i.a.w. legislation or similar. Liability = when activity that triggers payment of liability occurs.
Review payments to other levels of government.
GRAP 32
Service Concession Arrangements: Grantor
Replaces Guideline on PPPs.
Scope wider, not only PPPs as outlined in legislation  arrangements where an operator provides a mandated function of the grantor using service concession assets.
Review all arrangements to assess if SCA.
Transition – Retrospective.

9. At a glance Standard What to consider? GRAP 108 Statutory Receivables
Receivables that arise from legislation or similar means.
Accounted for differently and separately from contractual receivables.
Review current accounting policies and identify statutory receivables and change measurement principles, systems to identify presentation and disclosure requirements.
Transition: 3 years for classification and measurement.

10. At a glance Standard What to consider? GRAP 109
Accounting by Principals and Agents
Assess whether a principal-agent arrangement exists.
Who is principal and agent.
Disclosure.
Transition – Retrospective, but not for transactions completed on effective date.
IGRAP 20
Adjustments to Revenue
Statutory revenue transactions, subject to an appeal, objection or similar process  how to adjust revenue already recognised based on outcome of decision.
Error or change in estimate.
Review policies, systems to identify when each scenario occurs.
Transition.

11. Preparing for implementation
GRAP Guidelines still need to be developed by OAG.
If Standard is effective from 1 July 2019, do not wait until 30 June 2020 to understand the implications.
Start early so that there is time to adjust policies, processes, systems.
GRAP 20 – As entities had a choice of using IPSAS 20 or GRAP 20, the changes to the related party disclosures should be minimal.

12. Newly issued Pronouncement Status
Guideline on Accounting for Landfill Sites
Final Guideline.
Mandatory – date linked to amendments to GRAP 17 in proposed Improvements
Guideline on The Application of Materiality in Financial Statements
Final Guideline. Voluntary initially, will become mandatory
Amendments to GRAP 1
Final amendments approved.
Proposed 1 April 2020

13. Newly issued Pronouncement Status
Amendments to GRAP 104 Financial Instruments
Final changes issued.
Transitional provisions and effective date issued for comment
Proposed Transitional Provisions for the Standard of GRAP on Financial Instruments
Exposure Draft – comment deadline 29 November 2019

14. Newly issued Pronouncement Status
Feedback on GRAP for ‘small entities’
Research Paper being developed
Transversal issues emerging on the application of GRAP:
Measurement of non-current assets.
Technicality and relevance of aspects of Standards.
Keeping up to date with changes.
Applying materiality.
Financial instruments.
Disclosures for (small) entities.
Year-end adjustments.
Measurement of assets:
Determining fair value – ongoing challenge not just once off.
Applying judgements – useful lives, residual values.
Fully depreciated assets still in use.

15. Newly issued Pronouncement Status
Proposed Improvements to Standards of GRAP (2019)
Exposure Draft – comment deadline 31 October 2019
Work programme
Final to be published with new 5 year strategic plan

16. Contact details Tel: (011) 697-0660 Fax: (011) 697-0666
Website: