Accounting Standards Board

Edition Contents

Newsletter 32

Introduction
New Board Members
Work Programme
Technical Activities
	Clarification of issues relating to the implementation of Standards of GRAP
Regulators and Standard Setting Meeting
Next Meeting

INTRODUCTION

Issues covered during the meeting of the Accounting Standards Board on
19th January 2009 are featured in this edition.

Four new Board members attended their first Board meeting. They are:

•	Kim Bromfield
•	Cheryl Kujenga
•	Krish Kumar
•	Geo Paul

The Board unanimously re-elected Rick Cottrell as chairperson. Ignatius Sehoole was re-elected as the vice-chairperson. Kim Bromfield and Cheryl Kujenga were elected as new MANCO members.

The work programme was updated with the allocation of projects to the new Board members. The following allocations were agreed:

•	Kim Bromfield - Financial instruments project
•	Cheryl Kujenga - Segment reporting project
•	Krish Kumar - Entity combinations and transfer of functions
•	Geo Paul - Principal/agency relationships

Clarification of issues relating to the implementation of Standards of GRAP

The Board considered an exposure draft addressing issues on the implementation of the Standards of GRAP. It was agreed that three separate exposure drafts be issued since matters clarified in the exposure draft were unrelated.

The Board approved the following three exposure drafts for a one month comment period, subject to their circulation and approval by Board members on a round robin basis:

ED 53 - Amendments to Directives 2 to 4 prescribing transitional provisions for a transfer of functions

This exposure draft proposes amendments to the relevant transitional provisions in Directives 2 to 4. This allows entities a longer period of transition in cases where they are required to take over some assets and/or liabilities in a transfer of function (a reorganisation for political, economic or social reasons). In the absence of any local and international public sector guidance on the accounting for such a transfer of functions, the Board proposes that entities acquiring assets and liabilities in such a case have a three-year period during which to identify, recognise and measure the assets and liabilities acquired in the transfer.

ED 54 - Directive 5: Determining the GRAP Reporting Framework

The objective of the proposed directive is to set out the principles in determining the GRAP Reporting Framework. It aims to ensure that when formulating their reporting framework in the absence of a core set of GRAP Standards that apply to all public sector transactions, balances or events, entities are consistent in selecting Standards and pronouncements by other Standard authorities. An annexure to the proposed directive lists the Standards or other pronouncements that the Board considers to form part of the GRAP Reporting Framework for the financial period commencing on or after 1st April 2008.

ED 55 - Interpretation to the Standards of GRAP: Applying the probability test on initial recognition of exchange revenue

Due to the inconsistent approaches by entities when applying the probability test on the initial recognition of exchange revenue as required by the Standard of GRAP on Revenue from Exchange Transactions (GRAP 9), the Board agreed to issue an Interpretation of the Standards of GRAP on this matter.

As this is the first Interpretation of the Standards of GRAP to be issued by the Board, the meeting also agreed to publish a Preface to Interpretations of the Standards of GRAP for comment.

The proposed Interpretation of the Standards of GRAP requires an entity to assess the probability of each transaction on an individual basis when incurred, rather than assessing the probability on an overall level based on the payment history of recipients of the services in general. The Board concluded that the full amount should be recognised at initial recognition and that the assessment of impairment takes place subsequent to the initial recognition of the revenue.

Comment on the approved three exposure drafts is due by 23rd February 2009.
The exposure drafts can be downloaded free of charge from the Board's website at www.asb.co.za. Hard copies can be requested by contacting the Board's office at
(011) 697-0660 if any difficulties are experienced in accessing these exposure drafts.

The Board noted that a workgroup was formed by the Minister of Finance to develop responses to proposals by the G20 on improving regulations in the aftermath of the credit crisis. National Treasury was requested to extend an invitation to the private sector Standard setter since shortcomings in accounting that have been identified hitherto apply mainly to this sector.

The Board will meet on 11th March 2009.