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UP-TO-DATE: Keeping you informed of business today

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Our youth are the future leaders of our generation

We are all familiar with the above saying. And Alvin Toffler said: ‘For society to attempt to solve its desperate problems without the full participation of even very young people is imbecile.’

You have all taken a step to pursue a career as chartered accountants, for different reasons. It is a great achievement, and you fall in the top 10% in society, but it should not just stop there.

As future leaders we must get involved now, utilise the available resources, and have a voice that can be heard, be it in SAICA, IRBA or any of the other committees or institutions, because their policies affect how we operate in audit or industry.

We need an institution or a committee that can bring us together, the under-35s, to give us a platform to discuss ‘our issues’, ‘our interests’, and hopefully assist in the metamorphosis of article clerks into leaders of industry like Nicky Newton-King, Patrice Motsepe, Nanhla Nene, Christo Wiese, or even Lolly Jackson if that’s your cup of tea.

SAICA has identified this gap between article clerks and the young leaders under the age of 35 and thus has established the Young Chartered Accountants Network, YCAN. YCAN northern region falls under the Northern executive, and it’s aim is to service the needs of the under-35s, be it guidance, training, networking or just letting your hair down or any other initiatives that we see there is a lack of in terms of the progression of the future leaders of industry. We need your assistance and support to make this vision a reality.

Please visit the SAICA website where you will find a link to the YCAN website and more information regarding the committee, initiatives and members.

‘You don’t have to be great to start, but you have to start to be great.’
Author: Martin Mutonhora is a
financial reporting consultant at Core Reporting (Pty) Ltd

IBM invests R700 million in SMEs

IBM South Africa has invested R700 million in an equity empowerment programme to boost skills development and train more small-business people.
The country manager for IBM, Abraham Thomas, and executive manager for the Equity Equivalency Investment Programme Gavin Pieterse said it would contribute to the growth of skills development in technology.
Thomas said while IBM had been operating in the country for more than 50 years, it wanted to be more involved in skills development and training small entrepreneurs. IBM wanted to strengthen ties with South Africa.

Fast facts
IBM is the largest technology and consulting company in the world. The figures are based on the financial results of the end of 2013.

• Number of employees worldwide: 431 212
• Revenue: US$99,8 billion
• Net income: US$16,5 billion
• Total assets: US$122,22 billion

Source: Business Report, 20 February 2015

Cost of cyber-crime

Cyber-crime is having a significant economic impact on South Africa and the rest of the world, costing the country over R5,8 billion each year – a situation set to get worse.

This is according to the Global Cost of Cyber-crime report, compiled by Intel-owned McAfee software on behalf of the Center for Strategic and International Studies (CSIS), which estimates the cost of cyber-crime to the global economy to be in the region of US$400 billion.

McAfee said that cyber-crime in South Africa has an economic impact equal to about 0,14% of the country’s total GDP. With a GDP contribution of close to US$390 billion (R4,1 trillion), this means cyber-crime in South Africa is costing the country over US$550 million (R5,8 billion) a year.

Source: BusinessTech, 10 June 2014

Most expensive apartment in Johannesburg

A penthouse with a price tag of R60 million has gone on the market, making it the most expensive apartment in Johannesburg.
‘It is an unusual price point for Johannesburg but it is probably the most beautiful penthouse in Sandton. I’ve seen many of them but never anything like this,’ Wayne Venter, an estate agent at Pam Golding Properties, told CNBC Africa.
The apartment is located in the Regent Building in Sandton. It was initially two separate penthouses that have now been combined into one apartment. The property is approximately 585 square metres, making it almost R103 000 per square metre.
It comprises of four bedrooms with balconies, six bathrooms, a wine cellar, a home cinema, a heated pool, seven garages, as well as many other features.
From an investment point of view, however, Venter stated that it was unlikely to see a return on the property and that it was a purely buy-to-live piece.

Source: CNBCa.com, 12 February 2015

US$100 million
The price for which a two-story penthouse in Manhattan was purchased, setting a record for the most expensive apartment ever sold in New York City.

Source: Time magazine, 2 February 2015

Fifty per cent

Share of the world’s wealth that will be held by the richest 1% across the globe by 2016, according to a report from the antipoverty charity Oxfam.

Source: Time magazine, 2 February 2015

ANNOUNCEMENT OF THE SAICA ANNUAL GENERAL MEETING

The Annual General Meeting of members of the South African Institute of Chartered Accountants (SAICA) will be held at SAICA Integritas II, 7 Zulberg Close, Bruma Lake, Gauteng, on 25 June 2015 at 09:00.

Due and proper notice of the aforementioned meeting will be provided via the following means:

  • Electronic mail – if you are registered on our database as a member capable of accepting communications from SAICA in this manner, and
  • SAICA website – visit www.saica.co.za.

Proxy forms will be available on the SAICA website www.saica.co.za on or before 10 June 2015.

If you do not receive the notification or proxy form timeously, please contact the SAICA Call Centre for assistance at 0861 072 422 or +27 (11) 621 6600, or email mluz@saica.co.za.

Issued by:
Welsh Gwaza
Senior Executive: Legal and Governance
The South African Institute of Chartered Accountants

ACCOUNTING

Useful tools incorporated into the new eIFRS
The new eIFRS gives you access to the new Standards Comparison tool, the recently issued IFRSs, and the Standards Library dating back to 1975. For your convenience, a user-friendly search function has been installed. The new eIFRS can be accessed on the SAICA website.

SAICA IFRS offerings in 2015
SAICA is offering a variety of IFRS seminars and events to assist you to keep up to date with IFRSs and IFRS for SMEs, including the IFRS Back to Basics workshop, Accounting update seminar, and IFRS for SMEs seminar. The full list of SAICA’s IFRS offerings can be accessed on the SAICA website.

Is your entity’s year-end December 2014?
A useful list of IFRSs issued but not yet effective as at 31 December 2014 and the IFRS and IFRS for SMEs Illustrative Financial Statements are available on the SAICA website.

Criteria to classify liabilities revised
The International Accounting Standards Board (IASB) has published draft amendments to IAS 1 – Presentation of Financial Statements that will clarify:

  • That the classification of liabilities as either current or non-current is based on the rights that are in existence at the end of the reporting period, and
  • The link between the settlement of the liability and the outflow of resources from the entity

The IASB proposes that the draft amendments be applied retrospectively. These draft amendments could have an impact on the manner in which you classify some of your entity’s liabilities. Thus, we encourage you to provide your views to SAICA on this exposure draft by no later than 8 May 2015.

ED 351 – Classification of Liabilities: Proposed Amendments to IAS 1 – Presentation of Financial Statements and the IASB press release can be downloaded from the SAICA website.

ASSURANCE

IAASB proposes changes for Reporting on Special Purpose Financial Statements
The International Auditing and Assurance Standards Board (IAASB) released an exposure draft on the Proposed ISA 800 (Revised), Special Considerations – Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks and Proposed ISA 805 (Revised), Special Considerations – Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement, for comment by 22 April 2015.
The IAASB has amended ISA 800 and ISA 805 to provide guidance on how the enhancements to the New and Revised Auditor’s report would apply in audits of special purpose financial statements. These amendments are limited to auditor reporting and are not intended substantively to change the underlying premise of these engagements in accordance with the existing ISAs.
The exposure draft can be downloaded from the IAASB webpage on the IFAC website.

PUBLIC SECTOR
IPSASB published six new IPSASs
In January 2015, the IPSASB published the following new IPSASs:

  • IPSAS 33, First-time Adoption of Accrual Basis
  • IPSAS 34, Separate Financial Statements
  • IPSAS 35, Consolidated Financial Statements
  • IPSAS 36, Investments in Associates and Joint Ventures
  • IPSAS 37, Joint Arrangements, and
  • IPSAS 38, Disclosure of Interests in Other Entities

These IPSASs can be downloaded from the IPSAB webpage on the IFAC website.

TAX

Value-added tax consequences
Early in February 2015 the High Court in Cape Town overturned an earlier decision of the tax court. At issue was the value-added tax consequences of a barter transaction and specifically the fact that the vendor didn’t have a tax invoice to support a deduction.

The vendor in this instance and during the period in question organised jazz festivals in Cape Town. In the course of that enterprise it concluded sponsorship agreements with suppliers (sponsors) in terms of which the sponsors paid money towards and provided goods and services for the festivals, in return for which the taxpayer provided goods and services to the sponsors in the form of branding and marketing. After an audit, SARS identified that the vendor failed to account for the output tax. The vendor had no problem accounting for the output tax but needed to make a deduction of the input tax in respect of the goods and services acquired from the sponsors. SARS refused this on the basis that there was no tax invoice.

It was common ground that, notwithstanding requests by the vendor that they should do so, the sponsors had not provided the vendor with tax invoices and no documents of the nature described in section 16(2)(b) of the VAT Act had been issued.

Judge Binns-Ward allowed an input tax deduction relevant to a barter transaction without the supporting tax invoices. In arriving at this decision, the judge said:
‘If the documents were good enough for SARS to assess the vendor’s output tax liability, it is impossible to conceive, having regard to the character of the particular transactions, why they should not also have been sufficient for the purpose of computing the input tax which should have been deemed to have been levied by the sponsors.’

In essence then, if SARS used documents to determine output tax on, there is no reason these same documents can’t be used to determine the input tax. The case makes for interesting reading.