| Message from CEO - If you fail to plan, you are planning to fail |
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And this is oh so true when it comes to financial statement preparation. After just completing the PFMA reporting cycle, many of you may feel a bit of ‘reporting fatigue’ and be tempted to put off preparing for the next reporting cycle until next year.
There are a number of changes to the Standards of GRAP that will become effective on 1 April 2023. In this month’s Newsletters, we will identify the potential changes and what they mean in more detail. The diagram below shows the key milestones in the GRAP Reporting Framework based on pronouncements approved by the Minister of Finance or the ASB Board. Directive 5 on Determining the GRAP Reporting Framework will be updated by the Board in September 2022.
It is clear from the diagram that there are two key milestones where changes will need to be adopted, i.e. 1 April 2023 and 1 April 2025. While it is important to start considering how the revised GRAP 104 on Financial Instruments will be implemented, the most immediate concerns are with the pronouncements that will be effective from 1 April 2023. These are as follows: - GRAP 25 on Employee Benefits.
- IGRAP 7 on The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (2021).
- Improvements to the Standards of GRAP (2020).
- Amendments to GRAP 1 on Presentation of Financial Statements (2019).
- IGRAP 21 on The Effect of Past Decisions on Materiality.
- Guideline on Accounting for Landfill Sites.
When people think about implementing accounting standards, most just think about implementing the “end result” which is reflected in the financial statements. However, there are a number of steps required to get the end result. Implementing accounting standards involves 3 P’s – People, Policies, Processes. Using the changes to GRAP 25 as an example: - People – Who needs to be involved in the change (e.g. finance manager, audit committee, internal audit); from whom do you need information (e.g. human resources department)?
- Policies – Do you know and understand the remuneration and other employee benefit policies; do you need to amend existing accounting policies with new requirements of GRAP 25?
- Processes – Do you need to make any changes to your internal processes or procedures so that the financial/accounting implications are understood (and vice versa)?
To effectively implement changes to the 3 P’s, entities need to plan, and start implementing their plan, in advance of the reporting period in which the amendments need to be adopted. Ideally, if the changes are effective from 1 April 2023, entities should know already by this date what their plan is, and how they plan to execute it.
There are a number of resources available on both the ASB’s and Office of the Accountant-General’s (OAG’s) website to assist, including FAQs, Fact Sheets (ASB) and the GRAP Accounting Guidelines (OAG). |
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