Thank you for your previous response to our 'Call to Action' for the approval of a simplified ED285 reporting standard in November.

I've just received an email from SAICA the body of which is included below. This is an obvious disappointment and the delay is regretted....however there is some good news!

In my submission to SAICA I suggested that they make changes to allow us to continue to use the GAAP for SME's (Draft IFRS for SME's) to facilitate a single transition to ED285 when it is finalised. SAICA liked the idea and took it to the APC meeting a few weeks ago. The APC approved the extension and I've just received an email from SAICA confirming that the APB have been sent the changes for round robin approval.

So, by the end of next week we could hear from SAICA that the use of the GAAP for SME standard has been reinstated and we can continue to use it for at least another year (maybe even 2 more years of February reporting). This will provide considerable time savings in Annual Financial Statement preparation and should be a great relief for practioners.

I hope you will be pleased with this news too.

Yours personally


Carl Robinson CA (SA)

IT Mates cc
'Software Solutions for Accountants'
E-Mail: carl@itmates.co.za
Tel: 033 266 6859
Carl cell: 082 776 0702
www.itmates.co.za

STANDARDS: Financial Reporting Framwork for Non-Public Entities

The Financial Reporting Framework for Non-Public Entities (the Framework) has twice been sent out for comment. The current status of the process is as follows:
After completion of the last round of comments, we have been amending the Framework to incorporate the various comments and suggestions received.

The Working Group did, however, identify the following obstacle:
The Companies Act, 2008, states that all financial reporting standards (FRS) must be "consistent with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB) or its successor body". The Companies Amendment Bill proposes amending section 29(5)(b) to state that FRS must be"in accordance with IFRS".

SAICA has and continues to lobby in this regard that alignment with IFRS should only apply to FRS applicable to public companies (including those deemed to be in the public interest).

As the Framework would not meet the requirement in its current form, we have decided to put the process of completing the Framework on hold until we receive clarity on the final change to Section 29 of the Companies Act.

We believe that we will succeed in our lobby with dti and will keep you informed in this regard, immediately moving to complete the Framework should the Companies Act be appropriately revised.

Regards
Ewald Müller
 

INDEPENDENT REVIEW

The new Companies Act and it's 2011 Regulations have ushered in a whole new set of rules for Accountants and Auditors. One of those will be the possible change from an audit to an independent review.

Our latest Template Pty Review ISRE2400 has been released today.

This template is based on ISRE 2400, as the required standard, however it has been designed to be very practical for the Reviewer. A study of the standard reveals that much emphasis is placed on management representations. In the SME sector such reliance is often misplaced as management rely on the Accountant to prepare the financial statements.This means that additional procedures will always be required. This has been facilitated in our template through a modification of the existing audit template. We have 'moved' certain audit procedures to 'Xtra procedures' which can later be re-incorporated into the review programs when enquiries are unsatisfactory.

The starting point for use of this template is to read the Notes to the template:

REVIEW

Review will usually be of a significant company with a PIS >100.
AFS will have been compiled by the company or an independent accounting professional.

Review is mainly based on inquiries of company personnel and analytical review. If matters arise that cast doubt on the fair presentation, the reviewer must try to establish the 'correct' financial data and encorage management to amend the AFS.
All proposed amendments must be recorded on the Score sheet ZA100.

Only if the AFS are not amended will qualified review report be issued.

REVIEW PROGRAMS

'Enquire' - Make an enquiry of management either in writing or verbally. Ensure the enquiry is directed to the person who has the knowledge and authority to give an appropriate response. Record the response in the working papers or include in the Management Representasion letter, if significant. Note on ZA210 for latter extract to the Management Representation Letter.

'Consider' - Determine whether there is existing evidence available to the reviewer to make an informed judgement or whether an appropriate enquiry should to be made.

'Confirm' - Obtain a written response in the Management Representation letter, if significant.

Xtra Procedures should only be applied when the Reviewer becomes aware of a matter(s) that causes the reviewer to believe the financial statements may be materially misstated.


While the financial statements will have been compiled by an independent person, it will still be very useful to import the trial balance into AuditMate, assign to leads and group accounts to agree with the financial statements as this will facilitate materiality calculations, ratio analysis etc.

Please remember that this is version 1 of the template and revisions will be made based on user feedback in practice. We appreciate and encorage all comments.

A training module and/or video summarising the use of the template will be made available shortly.

Please note that the Pty Review ISRE 2400 template does not work with AccountsMate and an upgrade to AuditMate will be required to complete an Independent Review.