1. Developments in accounting for assets

2. Overview Amendments to: GRAP 16 Investment Property; and
GRAP 17 Property, Plant and Equipment.

3. Amendments to Investment Property and Property, Plant and Equipment3

4. Why were amendments needed?

5. Consultation highlighted the need for amendments
Post-implementation review of GRAP 16 & GRAP 17.
Objective was to solicit feedback from:
preparers → what challenges they experience in applying Standards of GRAP.
users → whether information in F/S meet their needs.

6. Areas identified
Issue #1 - Distinction between investment property (IP) and property, plant & equipment (PP&E).
Issue #2 - Useful lives & residual values.
Issue #3 - The use of external valuers.
Issue #4 - Disclosure on WIP.
Issue #5 - Encouraged disclosures.
Issue #6 - Repairs & maintenance disclosure.

7. Process to revise Standards
ED 127 issued to receive feedback on proposed changes.
Board approved amendments in March 2015.
Approval received from Accountant-General in June 2015 for amendments.
Effective date 1 April 2016.

8. Amendments to GRAP 16

9. Clarifying the application of the definitions
Properties are not investment property if:
used in production or supply (social housing, recreational facilities) → mandate specified in legislation or similar.
they contributing to the provision of a specific good and service in conjunction with other assets.
hold for disposal as part of ordinary course of operations.
No changes to the principles needed, just explain how the definitions should be applied.

10. Other areas of clarification
Identified other areas that require clarification:
amount of revenue earned not important – rather why/how property is used.
existence of lease in itself does not mean property is investment property.
rent does not need to be market related for property to be classified as investment property.

11. Amendments to GRAP 17

12. Review of useful lives and residual values
Annual assessment at each reporting date onerous.
Introduction of indicator based approach.
Conduct a detailed assessment if one or more indicators triggered.
List of indicators developed on consultation with engineers and asset managers.

13. Review of useful lives and residual values
Indicators:
Change in composition of asset.
Change in use: manner; utilisation rate; decision to dispose; technological environmental or commercial changes; changes in legal limits; asset idle.
Approaching end of useful life.
Planned R&M undertaken or delayed.
Environmental factors.
Change in condition.

14. Use of external valuers
Misconception that Standards require the use of a valuer.
Not required  MAY
Amended to clarify that can use:
- Independent member of valuation profession or another competent expert.
- Can be internal or external expert.
- No disclosure required.

15. Capital work in progress
Users need more information.
Disclose information on:
Cumulative expenditure on in process assets, per class of asset
Construction of assets taking a significantly longer period of time to complete than expected
Construction of assets stopped → reason and if assets impaired.
Flexibility in disclosing (ii) and (iii).
Affects GRAP 16, 17, 31 and 103.

16. Repairs and maintenance
Users need more information.
Repairs and maintenance
Separately disclose expenditure incurred to repair and maintain assets in notes (GRAP 16, GRAP 17, GRAP 103)
Include information on how amount determined  comparability

17. Encouraged disclosures
Eliminated from GRAP 16, 17 and 31.

18. Transitional provisions
Amendment
Prospective application
Retrospective application
Separate disclosure on repairs & maintenance on all assets. a
Indicator based approach.
Disclosure on capital WIP.
Use of external valuers (professional valuer or another expert)
More explanations, guidance and examples to distinguish IP and PP&E.
Deletion of all encouraged disclosures

19. Effective date Financial periods commencing on or after 1 April 2016.
Approval from Accountant-General.

20. Other issues 20

21. Other issues Effective dates of:
- Amendments to GRAP 5 and 100 (14/15).
- GRAP 105 to 107, and Directive 11 (15/16).
- Improvements from 2013/14 (15/16).

22. Other developments 22

23. Other developments To be considered by the Board in July:
Principals and agents.
Amendments to GRAP 21 and GRAP 26.
Working on:
Guidance on accounting for housing and land.

24. Contact details Tel: (011) 697-0660 Fax: (011) 697-0666
Website:
: Accounting Standards Board