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

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Global 500

It was a topsy-turvey year. Collectively, the 500 biggest companies in the world ranked by revenue set a new record in 2014 by generating $31,2 trillion in sales, a gain of 0,5% over 2013. But total profit for the global 500 fell nearly 15% to $1,7 trillion. One major reason for the plunge was lower crude prices, which hit the oils and gas hard. Then there was the Fannie and Freddie factor: in 2013, US mortgage giants Fannie Mae and Freddie Mac surged to a combined $133 billion in profit. That figure dropped to just $22 billion in 2014. The single biggest profit maker was Industrial & Commercial Bank of China. Its $44,8 billion in net income outpaced even Apple’s robust $39,5 billion profit.

Source: Fortune, 1 August 2015

Wi-Fi and Maslow’s new hierarchy of needs

Maslow’s hierarchy of most basic needs has been adapted to the new world order. Wi-Fi is now a serious contender as a basic need. As we live in a connected world, people feel vulnerable when they’re without a smartphone or can’t access a wireless network.

Just how intense is the need for Wi-Fi? Some Londoners unwittingly signed over their first-born children in exchange for access to free Wi-Fi last year. An experiment was conducted whereby an unsecured, free
Wi-Fi hotspot was set up in a busy London district so they could see who would fall victim to the ‘Herod Clause’ and other forms of IT theft.

The ‘Herod Clause’ was put into the terms and conditions of accessing the free Wi-Fi. In agreeing to gaining access to the free Wi-Fi, users had to sign away their first-born child. Six people clicked ‘Agree’.

If you give people free Wi-Fi, they might not willingly give you their first born, but they’ll happily give you their (increasingly rare) loyalty.

Source: Dion Chang, Business and consumer trends for 2015, 16 January 2015

 

National Schools Accounting Olympiad Results

Olympiad_Octoberupdates

SAICA, in partnership with Sage Pastel Accounting, announced that the National SAICA Sage Pastel Accounting Olympiad winner is Sumaiya Jeewa from the Middelburg Muslim School in Mpumalanga. Sumaiya scored an impressive 95%.

Thembelihle Mzila from Ladysmith High School (KZN) was second with 94% and the third place was a tie between Joshua Gonggryp from Westville Boys’ High (KZN) and Naushaad Maharaj from Rondebosch Boys’ High School (WC), who both scored 93%.

The Accounting Olympiad, which began in 2007 in Bloemfontein as a regional competition driven by Sage Pastel Accounting, has been a national competition since 2010. Focused on recognising youthful accounting talent and nurturing an interest in accounting as a profession among young South Africans, the Olympiad attracts the country’s top accountancy minds from schools nationwide. In line with SAICA’s strategy to transform the profession and grow the number of chartered accountants in South Africa, the Olympiad plays a key role in making a clear link between accountancy as a subject at school and a possible career in an accounting or other business field.

Woman of Substance Award

The African Women Chartered Accountants (AWCA) on 6 August awarded the 11th prestigious Woman of Substance Award to Public Protector Advocate Thuli Madonsela.

The Woman of Substance Award is given to an exceptional woman who has played a significant role in uplifting the role of black women in accounting, audit and financial professions, or a woman who has demonstrated quality and successful leadership in areas of governance and business to realise gender parity.

AWCA President Lesego Sennelo said: ‘We are proud and excited to be honouring Advocate Thuli Madonsela, a phenomenal woman and a trailblazer in her profession, who epitomises ethical leadership and good governance. Advocate Madonsela is a true testament that women in South Africa and Africa have begun to take their rightful place as leaders of society, business and government.’

ACCOUNTING

2015 IFRS, A Briefing for Chief Executives, Audit Committees and Board of Directors
This briefing provides summaries, in non-technical language, of IFRSs and includes summaries of the new revenue and financial instruments standards. The briefing can be downloaded from eIFRS.

Latest developments on IFRS 15, Revenue from Contracts with Customers
IASB proposes clarifications to IFRS 15
The proposals aim to clarify:

  • How to identify the performance obligations in a contract
  • How to determine whether a party involved in a transaction is the principal or the agent, and
  • How to determine whether a licence provides the customer with a right to access or a right to use the entity’s intellectual property

ED 360, Clarifications to IFRS 15 and the IASB press release can be downloaded from the SAICA website.

Comments on ED 360 should be submitted to the IASB by 28 October 2015.

Effective date of IFRS 15 revised
The IASB has deferred the effective date of IFRS 15 to 1 January 2018. Access IFRS 15 from eIFRS.

Understand the requirements of IFRS 15 and the implications to your company before this effective date by attending SAICA’s accounting update seminars in October and November 2015. Bookings should be made through the SAICA website.

ASSURANCE

IAASB issues Exposure Draft to ISA 810, Engagements to report on summary financial statements
Limited amendments are proposed in this exposure draft as a result of the issuance of the new and revised auditor reporting standards. The effective date of ISA 810 (Revised) will be aligned to the effective date of the new and revised Auditor Reporting Standards. Comments are due on 2 November 2015. Visit the IFAC website to download this exposure draft.

IAASB proposed amendments to IAASB’s International Standards – Responding to Non-Compliance or Suspected Non-Compliance with Laws and Regulations
The IAASB’s proposals seek to acknowledge the enhancements that will be made by the IESBA in its Code of Ethics for Professional Accountants and clarify and emphasise key aspects of the IESBA’s proposals in the ISAs. Comments are due by 21 October 2015. This Exposure Draft may be downloaded from the IFAC website.

PUBLIC SECTOR

ASB issued Directive 12 on The Selection of an Appropriate Reporting Framework by Public Entities
Directive 12 is effective for financial periods commencing on or after 1 April 2018 and is available on the ASB website. Earlier application is permitted.

IPSASB issued a consultation paper on the Recognition and Measurement of Social Benefits
This consultation paper has been issued for comments by 31 January 2016 and is available on the IPSASB’s website.

ASB issued GRAP 109, Accounting by Principals and Agents
GRAP 109 outlines principles to assess whether an entity is party to a principal-agent arrangement. The effective date has not been determined. Visit the ASB website to download GRAP 109.

IPSASB published Exposure Draft 56, The Applicability of IPSASs
ED 56 proposes to remove the definition of GBEs from IPSAS 1 and to amend the scope section of each IPSAS and RPGs. The deadline for comments is 30 November 2015. Visit the IPSASB website to download ED 56.

TAX

Country-by-country reporting
It’s been just over a year since the OECD adopted country-by-country CbC reporting as a tool for tax authorities to assess the transfer pricing risk in respect of multinational enterprises (MNEs). Affected MNEs will most likely be required to report to local tax authorities, which will then share the reports with other jurisdictions. Since then, further guidance has been issued by the OECD while, from a South African perspective, the Davis Tax Committee (DTC) has made recommendations regarding the type of reporting as well as the businesses that it feels should be obliged to report. In terms of the DTC recommendations, MNEs with a combined group turnover of more than R1 billion may have an obligation to report (the OECD threshold is €750 million). The DTC recommendation in terms of reporting follows a three-tier approach:

  • A master file containing standardised information relevant for all MNE group members
  • A local file referring specifically to material transactions of the local taxpayer, and
  • A CbC report containing certain information relating to the global allocation of the MNEs income and taxes paid together with certain indicators of the location of economic activity within the MNE group

While guidance is still forthcoming and there is a lot of uncertainty, it is likely that the required reports will need to be submitted to SARS and SARS, in turn, will be required to share this information with the tax authorities in affected jurisdictions within six months thereafter.

The date of implementation proposed by the OECD is 1 January 2016 with the first reports having to be submitted by 31 December 2017 – that is, one year after the end of the year in respect of which the CbC report relates. It is unclear at this stage whether South African taxpayers may be given an extension by SARS in this regard.

Based on the initial reporting templates, MNEs may have to consider system changes as well as staff capacity to ensure that they are in a position to submit the relevant information in the required format and by the relevant deadlines.

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