New pronouncements issued by the ASB
The ASB Board met on the 30th of September and issued new pronouncements.
GRAP Reporting Framework for periods commencing on or after 1 April 2021
The Board issues an update to Directive 5 on Determining the GRAP Reporting Framework each year. The update outlines the pronouncements of the Board and other standard-setters that should be considered in preparing the financial statements.
The Board approved the reporting framework for the 2021/22 reporting period. As in previous reporting periods, the changes from the previous reporting framework are published as an annexure to Directive 5. The full list of the pronouncements applicable for the period is available on the ASB’s website. The Secretariat has also published the “Reporting Frameworks At-A-Glance”.
The documents can be accessed by following this link.
Research Paper on Application of Standards of GRAP by Small Entities
The Board was asked to consider whether there should be different reporting requirements for “small entities”. The Board initiated a research project which focused on identifying what a “small entity” is in the public sector and understanding the issues they face in preparing financial statements using Standards of GRAP.
Based on the outcomes of the research, the Board agreed that separate reporting requirements should not be introduced for small entities.
The Board’s findings, conclusions and actions are outlined in the Research Paper on Application of Standards of GRAP by Small Entities. The document can be accessed by following this link.
Proposed Interpretation of the Standards of GRAP on The Effect of Past Decisions on Materiality (ED 185)
In finalising the Guideline on The Application of Materiality to Financial Statements, questions were raised with the Board about whether past decisions about materiality can affect future reporting periods.
These questions included, for example: - If an entity decides to expense assets that are considered immaterial in a particular period, can the decision affect future periods?
- Should an entity keep record of decisions about materiality to assess whether the effect of these could potentially become material over time.
There has been diversity in practice to date on these issues with some stakeholders supporting the view that decisions do affect future periods, while others were of the view that materiality is a period specific assessment.
The Board agreed to review the principles in GRAP 3 on Accounting Policies, Changes in Accounting Estimates and Errors and to consult with preparers to understand what guidance, if any, could be provided to entities. As a result of the diversity of views expressed historically, the Board agreed that interpretive guidance is needed.
The proposed Interpretation was issued for comment. The comment deadline is 26 February 2021. ED 185 and supporting materials can be accessed by following this link. We will be hosting a series of roundtable discussions in February 2021. Details will be provided on our website and our Newsletter.
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