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EXPOSURE DRAFT 275 – FINANCIAL REPORTING FRAMEWORK FOR NON-PUBLIC ENTITIES

The Exposure Draft ED 275 – Financial Reporting Framework for Non-public Entities was released for comment during December 2009. An important part of developing the framework is to solicit comments from preparers, auditors, users, government and other parties with an interest in a Financial Reporting Framework for Non-public Entities. Accordingly the framework was released for interested parties to submit comments. The framework had previously been released as ED257, resulting in extensive changes requiring the re-release as ED275. The framework had a comment period of two months. Upon closure of the comment period, at the end of January 2010, the Working Group considered the submissions made, and modified, where appropriate, the framework in the light of comments received, before proceeding to issue a finalised framework.

The framework’s scope includes the development of a high quality framework for entities that are not required by law to apply any other framework (such as IFRS or Statement of GAAP for SMEs). The primary users of these financial statements were identified as the owners of the entities, financial institutions and SARS.

Some of the Framework’s treatments include the use of historical costs, finance lease capitalisation is optional and effects of prior period errors and changes in accounting policies will be presented in the current year’s statement of income and expenditure (below the current year profit).

AUDITING

CONSULTATION PAPER TO ENHANCE REPORTING ON GREENHOUSE GASES

On October 22, 2009, the International Auditing and Assurance Standards Board (IAASB) issued a Consultation Paper entitled: Assurance on a Greenhouse Gas Statement. The Consultation Paper asks a series of questions addressing such matters as:

• the form of assurance report that users would find most useful,
• the nature and extent of requirements,
• the technical aspects of applying the assurance process to Greenhouse Gases (GHGs), and
• how a standard should best integrate with regulatory requirements.

The IAASB intends to use the feedback on the consultation paper to develop an exposure draft of a proposed new assurance standard on Greenhouse Gas Statements for release in 2010.

The Consultation Paper is released with the objective of enhancing the credibility of GHG information because of the importance to the public interest of decisions being made on the basis of that information. Furthermore, having reliable information is key to global efforts to reduce emissions and stabilise the level of carbon in the atmosphere.

Members are encouraged to respond to the Consultation Paper, either in its entirety or to selected questions that are of special interest to them. Comments on the Consultation Paper are requested by no later than February 19, 2010.

A copy of the Consultation Paper may be viewed and downloaded from the IFAC website: (www.ifac.org/Guidance/EXD-Outstanding.php).

REGULATED INDUSTRIES

EXCHANGE CONTROL

The Exchange Control department of the South African Reserve Bank (EXCON) has issued the following Exchange Control Circulars:

No. 12/2009 – Securities Control – Authorised Banks

Authorised Dealers are advised of amendments to the list of names contained in Section G.(A)(iii)(j) of the Exchange Control Rulings under the headings of ABSA Bank Limited, FirstRand Bank Limited, Nedbank Limited and The Standard Bank of South Africa Limited.

Section G.(A)(iii)(j) of the Exchange Control Rulings has been amended accordingly.
No. 13/2009 – Statement on Exchange Control

The Minister of Finance announced in the 2009 Medium Term Budget Policy Statement further steps in the liberalisation of exchange controls. Steps announced by the Minister include the following:
1. Further relaxation of exchange controls.
2. Aligning prudential regulations on financial institutions with G20 commitments.
3. Removing red tape on business transactions.
4. Further relaxation of limits on individuals.
5. Removing controls on non-residents.
6. Supporting investment and cutting red tape.

The objective of the Treasury is to lower the cost of doing business in South Africa while managing risks in a volatile international environment – in line with proposals to strengthen the country’s regulatory framework, in alignment with G20 agreements.

It is noted that National Treasury proposes to improve the current exchange control regulatory framework for approving investments. The key proposals that will form part of the modernised approach will be announced in the 2010 budget.

The following Exchange Control Circulars, in amplification of the foregoing have been issued:
• Circular No. 14 of 2009 – Advance payments and/or cash with order requests,
• Circular No. 15 of 2009 – Foreign capital – private individuals resident in the Republic,
• Circular No. 16 of 2009 – Foreign direct investments outside the Common Monetary Area by South African companies,
• Circular No. 17 of 2009 – Emigration allowances,
• Circular No. 18 of 2009 – Single discretionary allowance
• Circular No. 19 of 2009 – customer foreign currency accounts and foreign bank accounts, and
• Circular No. 20 of 2009 – Local financial assistance to affected persons and non-residents.

Replacement pages of the amended Exchange Control Rulings can be requested from SAICA through our query system on www.saica.co.za.

TAXATION

SAICA’s National Tax Committee submissions

SAICA made the following submissions to SARS/National Treasury during September 2009.

Submission

Comment Deadline

Comment Submitted

SAICA Submission to Treasury on 2010 Income Tax Annexure C Proposals

30 October 2009

30 October 2009

Joint response letter to SARS on Regulation of Tax Practitioners Bill

9 October 2009

9 October 2009

SAICA Submission to SARS on Draft Interpretation Note 47 (Issue 2) Section 11(e)

N/A

9 October 2009

SAICA Submission to SARS on Comprehensive guide to Capital Gain Tax Issues 2

N/A

5 October 2009

SAICA Submission to Treasury on 2010 VAT Annexure C Proposals

30 October 2009

6 October 2009

SAICA Submission to SARS on PAYE Reform 2010

10 August 2009

13 August 2009

Copies of these and previous submissions are available on our website at www.saica.co.za.