| GRAP 20 on Related Party Disclosures: Standard vs Application |
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The ASB Board (the Board) approved a project brief on GRAP 20 Related Party Disclosures at the September 2023 Board meeting. The purpose of the project is to assess compliance with the requirements of GRAP 20 and obtain insights into the practice applied by preparers in presenting Related Party Disclosures.
As the project is primarily a desktop review, the intention is to identify transversal issues across entities subject to the review and to communicate findings and actions to constructively improve financial reporting.
There will be limited stakeholder engagements however, engagements may be held to solicit inputs on the practical application of the Standards.
Although the objective is to assess compliance with all GRAP 20 disclosure requirements, certain areas have been identified which may require specific review and include: - The application of the definition of related parties.
- Disclosure of related party relationships between entities in the National and Provincial spheres of government respectively.
- Omitted qualitative disclosure of e.g., the terms and conditions of outstanding balances, including commitments with related parties; whether they are secured, and the nature of the consideration to be provided in settlement.
- The non-disclosure of the amount of the transactions with related parties.
- The non-disclosure of balances owed to or receivable from related parties.
- The omission of related party disclosures in their entirety, in circumstances where related party transactions are expected based on the other information contained in the financial statements or based on knowledge of the public sector e.g., services in kind that can be reliably measured.
- The disclosure requirements prescribed for management remuneration, particularly the disclosure of councillors’ remuneration on an individual or aggregate basis.
- The impact of materiality (qualitative and quantitative) considerations on the presentation and disclosure of related parties.
The desktop review will be completed in quarter one of 2025, and the findings will be tabled to the Board by June 2025. Depending on the nature of the findings a Review Report may be prepared to outline the findings of the review and the Board’s actions (if any).
The findings from this review will assist the Board in assessing whether changes to the Standard are required, whether guidance is required, and/or whether awareness should be raised about specific issues through communication and other activities. |
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