| Who should apply Standards of GRAP and the Modified Cash Standard and for how long? |
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Entities, including departments and government components in the public sector, are required to prepare financial statements using Standards of GRAP. Questions have been raised about the application of the Modified Cash Standard (MCS) by certain entities.
Instruction Note 1 of 2021/22 explains the following: - The MCS has been issued as a norm and standard in terms of the Public Finance Management Act, and prescribes principles and rules for the recognition, recording, measurement, presentation and disclosure of information in the financial statements.
- National and provincial departments and government components which currently apply the MCS, have been exempted from preparing financial statements using Standards of GRAP for a period of 5 years commencing on 1 April 2021.
- During the period of exemption, the MCS should be applied by departments and government components (that apply MCS).
- National and provincial revenue funds should prepare financial statements using the MCS.
The Instruction Note is effective from 1 April 2021.
The Instruction Note is available on the Office of the Accountant-General’s website.
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