ACCOUNTING

Accountancy SA,  Dec 2007/Jan 2008  

• E-mail
• Print
• Link

ISSUE OF SA GAAP FOR SMEs

The South African Statement of Generally Accepted Accounting Practice (GAAP) for Small and Medium-sized Entities (SMEs) (the Statement), was issued in October 2007.

The Accounting Practices Board (APB) approved the issue of the Statement in response to market needs and differential reporting allowed by the Corporate Laws Amendment Act, 2006 (CLAA).

The Statement may be used by companies defined as 'limited interest' in the CLAA and other entities with no public accountability. These companies and entities will now have a choice of reporting in terms of the Statement or in terms of full Statements of GAAP or IFRS.

A company that will qualify as a limited interest company' in terms of the CLAA may apply the Statement even though the CLAA has not been given an effective date, (assuming the scope requirements in section 1 of the Statement are met) and still be in compliance with the Companies Act, 1973. The reason being that the Statement forms part of 'Statements of GAAP as approved by the APB', as referred to in paragraph 5 of Schedule 4 of the Companies Act, 1973.

The Statement is effective and can be used immediately (see the effective date section of the front cover of the statement for detailed guidance.)

Circular 9/2007 - Statement of GAAP for SMEs, has also been issued to provide more detail in terms of the application of the Statement. The circular addresses the following areas:

* Current and future classification of companies in the context of the corporate law reform process.

* The scope and effective date of the Statement.

* Financial reporting frameworks for 'limited interest companies'.

* Development of the Statement.

Some areas to be aware of in applying the Statement.

* Audit reporting considerations.

A document outlining frequently asked questions has been prepared to provide answers to questions that are expected to arise with the application of the Statement. The list of questions was compiled from the comments received at ten discussion forums held around the country. In the event that this document does not provide an answer to any of your questions, please e-mail your query, with your membership number, to standards@asaica.co.za.

Full-day implementation seminars will be available from 19 November 2007. To view a complete section outlining all the available information on the Statement, please visit www.saica.co.za http://www.saica.co.za and click on the prominent Statement of GAAP for SMEs icon on the main page.

REVISED STANDARD ON THE PRESENTATION OF FINANCIAL STATEMENTS

The International Accounting Standards Board (IASB) has issued a revised version of IAS 1 - Presentation of Financial Statements. The revision is aimed at improving users' ability to analyse and compare the information given in financial statements.

The changes made are to require information in financial statements to be aggregated on the basis of shared characteristics, and to introduce a statement of comprehensive income. This will enable readers to analyse changes in a company's equity resulting from transactions with owners in their capacity as owners (such as dividends and share repurchases) separately from 'non-owner' changes (such as transactions with third parties). In response to comment received through the consultation process the revised standard gives preparers of financial statements the option of presenting items of income and expense and components of other comprehensive income either in a single statement of comprehensive income with subtotals, or in two separate statements: a separate income statement followed by a statement of comprehensive income.

The revisions include changes in the titles of some of the financial statements to reflect their function more clearly, for example, the balance sheet is renamed a statement of financial position. The new titles will be used in accounting standards, but are not mandatory for use in financial statements.

The revised standard will come into effect for the annual periods beginning on or after 1 January 2009, but early adoption is permitted.

The publication of the revised IAS 1 marks the completion of the first phase of the lASB's joint initiative with the US Financial Accounting Standards Board (FASB) to review and harmonise the presentation of financial statements. The second phase, which has already begun, is examining more fundamental questions about the presentation of information in financial statements, and the IASB expects to publish a discussion paper on the subject within the next six months.

This will be issued as a Statement of Generally Accepted Accounting Practice, once approved by the Accounting Practices Board. The revised IAS 1 is available in the International Section of the handbook-on-line.

EXPOSURES QUALIFYING FOR HEDGE ACCOUNTING

The IASB has published, for public comment, an exposure draft of proposed amendments to IAS 39 - Financial Instruments: Recognition and Measurement: Exposures Qualifying for Hedge Accounting. The amendments are intended to clarify what can be designated as a hedged item in a hedge accounting relationship. This has been issued in South Africa as ED 228.