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News - Technical
Tax Practitioner details
The Employer Monthly Declaration (EMP201) Return for payment of Provisional Tax (IRP6) and VAT Vendor Declaration (VAT201) returns have been updated to include fields for Tax Practitioners' registration numbers and telephone numbers. Validations have been built into the Tax Practitioner registration number field and will ensure that only valid registration numbers will be accepted. Once the Tax Practitioner's registration number is completed, the telephone number field becomes mandatory. The introduction of the Tax Practitioner detail fields will identify the Tax Practitioner as well as provide a way for SARS to detect possible fraud and, as such, protect both taxpayers and Tax Practitioners.
ACCOUNTING
New Chairman of the IFRS Foundation announced
The Trustees of the IFRS Foundation have announced the appointment of Michel Prada as the Chairman of the Trustees. Mr Prada is a former Chairman of the Executive and Technical Committees of the International Organisation of Securities Commissions (IOSCO) and is a highly respected advocate of investor protection and independent standard-setting. Mr Prada will serve an initial three-year term, which commenced on 1 January 2012. The IFRS Foundation press release can be downloaded from the SAICA website.
SMEIG issues two final Q&As on IFRS for SMEs
Entities with public accountability are not eligible to use the IFRS for SMEs. An entity has ‘public accountability' if it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses. Paragraph 1.3(b) of the IFRS for SMEs identifies banks, credit unions, insurance companies, securities brokers/dealers, mutual funds and investment banks as examples of the type of entity that ‘typically' holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses. However, in its Q&A issued, the SME Implementation Group (SMEIG) has indicated that not all of these types of entities should automatically be assumed to have public accountability. Instead, judgement should be applied in making the assessment. The Q&A document gives two examples of these types of entities that do not have public accountability, including captive insurance subsidiaries and investment funds with only a few participants.
Furthermore, paragraph 1.3 of the IFRS for SMEs states that an entity has public accountability ‘if its debt or equity instruments are traded in a public market or it is in the process of issuing such instruments for trading in a public market'. The second Q&A notes that a ‘public market' is not restricted to recognised or regulated stock exchanges. A market is considered ‘public' if it can be accessed by a broad group of outsiders. Instruments that can only be exchanged between parties involved in management are not considered to be traded in a public market. The Q&A further states that the availability of a published price should not necessarily be interpreted to mean that an entity's debt or equity instruments are traded in a public market.
The Q&As IFRS for SMEs can be downloaded from eIFRS.
IASB and IFAC agreement to enhance co-operation in developing IFRSs and IPSASs
The IASB and the International Federation of Accountants (IFAC) have concluded an agreement that will strengthen their co-operation in developing private and public sector accounting standards. The Boards have worked closely previously on many of the International Public Sector Accounting Standards (IPSASs) that are primarily drawn from International Financial Reporting Standards (IFRSs). The agreement represents a further commitment to enhance co-operation between the two Boards, with a view to ensuring greater consistency in their respective standard-setting activities. The IASB press release and the MoU can be downloaded from the IASB website.
Revised draft standard on revenue issued
Following the publication of the exposure draft on revenue (ED 284) in 2010, the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) have revised their draft standard on revenue taking into consideration the comments received from their constituents. The revised proposals aim to:
- improve comparability of revenue recognition practices across companies, industries and capital markets;
- simplify the preparation of financial statements by reducing the number of requirements to which a company must refer;
- reduce the need for interpretative guidance to be developed on a case-by-case basis to address emerging revenue recognition issues; and
- provide more useful information to users of financial statements through improved disclosure requirements.
In responding to the comment received, the Boards provided additional guidance to assist in determining when a good or a service is transferred over time, simplified the requirements on warranties, and simplified its proposals on how to determine a transaction price.
The Boards decided that, on the basis of their current timetable for the project, a final revenue standard would not be effective earlier than for annual reporting periods beginning on or after 1 January 2015.
The deadline for comment to the IASB is 13 March 2012.
ED 309 – Revenue from Contracts with Customers, the Snapshot, the IASB press release and the podcast can be downloaded from the SAICA website.
Another CA(SA) to Provide SA Views to Development Of IFRS
Bruce Mackenzie CA(SA), Managing Partner at W.consulting, has been appointed to represent the South African Financial Reporting Standards Council (FRSC) on the International Financial Reporting Standards (IFRS) Advisory Council. The Advisory Council is the formal advisory body to the International Accounting Standards Board (IASB) and the Trustees of the IFRS Foundation.
The Council meets three times a year to advise the IASB on a range of issues, including the IASB's agenda and work programme. The Advisory Council also provides advice on single projects with a particular emphasis on practical application and implementation issues, including matters relating to existing standards that may warrant consideration by the IFRS Interpretations Committee.
Mackenzie replaces Moses Kgosana, who served on this body for three years representing the views of South African stakeholders, as the chair of the Accounting Practices Board.
Mackenzie has a wealth of experience in IFRSs and has served on a number of committees, both locally and internationally, including the Small Medium Enterprise Implementation Group (SMEIG) of the IASB.
His appointment to the Advisory Council follows the appointments of many other CAs(SA) that currently occupy positions on the IFRS Foundation bodies. These include: Jeff van Rooyen, who is a Trustee of the IFRS Foundation, Darrel Scott, who is a member of the IASB, Frank Timmins, who sits with Mackenzie on the SMEIG, Professor Wiseman Nkuhlu, who serves on the Financial Crisis Advisory Group, Kevin Davies is on the IASB's Global Preparers Forum and the Lease Accounting Working Group and Kim Bromfield is on the Employee Benefits Working Group.
“We are very proud of Bruce's appointment,” says Sue Ludolph, project director, financial reporting at the South African Institute of Chartered Accounts (SAICA). “This is another milestone for SAICA and further confirmation that the CA(SA) brand continues to play a significant leadership role worldwide.”
Ludolph pointed out that South Africa was rated Number 1, again in 2011, for auditing and financial reporting standards by the World Economic Forum, which substantiates the important role that the country and the CA profession plays in international financial reporting.
Mackenzie is an approved Johannesburg Stock Exchange IFRS Advisor. He has worked for Deloitte both in South Africa and the United Kingdom in their IFRS Centres of Excellence and with Barclays Capital in London.
ASSURANCE
Reportable Irregularities relating to Independent Review Engagements
Independent Reviewers need to be aware of the definition of a Reportable Irregularity in terms of the regulations in order to comply with the reporting obligations placed on them.
Regulation 29(1) (b) of the Companies Act defines a reportable irregularity (RI) as follows:
"any act or omission committed by any person responsible for the management of a company, which-
i. unlawfully has caused or is likely to cause material financial loss to the company or to any member, shareholder, creditor or investor of the company in respect of his, her or its dealings with that entity; or
ii. is fraudulent or amounts to theft; or
iii. causes or has caused the company to trade under insolvent circumstances.”
It is important to note that the inclusion of 29(1)(b)(iii) above differs from the definition of reportable irregularity for audit engagements, as such a requirement does not form part of the RI definition in terms of section 1 of the Auditing Professions Act.
The effect is that the RI definition for Independent Reviews is more onerous than that for audits since the existence of any insolvent circumstance would require the Independent Reviewer to report an RI to the Commission and Intellectuals Property Commission (CIPC).
It is also important to note that regulation 29(1)(b)(iii) simply states “insolvent circumstances”, which is interpreted to mean both commercial and factual insolvency. Until CIPC issues a practice note to explain what is meant by “insolvent circumstances”, Independent Reviewers are advised to report any insolvency (commercial and factual insolvency) to CIPC as a RI in order to comply with the regulations. asa
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