Vision of the ASB - National Government · The ASB has become a leader in Standard-setting by...
Transcript of Vision of the ASB - National Government · The ASB has become a leader in Standard-setting by...
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• SetStandardsofGenerallyRecognisedAccountingPractice(GRAP)forthefinancialstatementsofinstitutionsinallofgovernment;
• Prepareandpublishdirectives,guidelinesandinterpretationsconcerningtheStandardsofGRAP;• RecommendeffectivedatesofimplementationoftheseStandardsofGRAPforthedifferentcategoriesofinstitutionsto
whichtheseStandardsofGRAPapplytotheMinisterofFinance;• Performanyotherfunctionincidentaltoadvancingfinancialreportinginthepublicsector;• TakeintoaccountallrelevantfactorsinsettingStandardsofGRAP,includingbestpracticeandcapacitytoimplement;• SetdifferentStandardsofGRAPwherenecessaryfordifferentcategoriesofinstitutionstowhichtheseStandardsof
GRAPapply;and• Promoteaccountability,transparency,andeffectivemanagementofrevenue,expenditure,assetsandliabilitiesofthe
institutionstowhichtheseStandardsofGRAPapply.
Vision of the ASBTo developAccounting Standards that promote accountability, transparency and effective financialmanagementwithin allspheresofgovernment.
Mission of the ASBTheASBachievesthisthroughfocusedandtargetedstakeholderinteractionthatresultsintheprovisionofrelevant,credibleandimplementableAccountingStandards.
Objectives of the ASB• SetStandardsofGRAP• InfluencedevelopmentofinternationalStandards• PromotetheadoptionoftheStandardsofGRAP• MonitortheapplicationoftheStandardsofGRAP• Realisethepotentialofourpeople• Communicatewithstakeholders• Promotegoodgovernanceandfinancialmanagement
The ASB’s Mandate
TheprincipalfunctionsoftheBoardintermsofsection89ofthePFMAareto:
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Contents
TheASB’sMandate.................................................................................................................................... 2
VisionoftheASB....................................................................................................................................... 2
MissionoftheASB..................................................................................................................................... 2
ObjectivesoftheASB................................................................................................................................. 2
Section1
Chairperson’sReport.................................................................................................................................. 4
ReviewofOperationsbytheCEO................................................................................................................ 5
Section2
Performancereviewfor2014/15................................................................................................................. 8
StakeholderOutreach................................................................................................................................. 13
Engagementswithstakeholders..................................................................................................................... 15
Section3
Reportonsustainability................................................................................................................................ 19
Section4
Keystrategicobjectivesfor2015/16............................................................................................................ 21
Section5
Governance.............................................................................................................................................. 24
Humanresourcemanagementanddevelopment.............................................................................................. 30
ReportoftheAuditandRiskCommittee.......................................................................................................... 33
Independentassurancereport....................................................................................................................... 35
Section6
StatementofResponsibility........................................................................................................................... 38
AnnualFinancialStatements......................................................................................................................... 39
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Review of Operations by the CEOSignificantresourcesareallocatedtothepublicsector.Reportingontheuseofthoseresources,whetherthroughthedeliveryofservices,providinginfrastructuretoenabletheeconomytogrowandthrive,orensuringcitizenshaveasafeandsecurelivingenvironment,isacornerstoneofafunctioningpublicsector.ThecredibilityoffinancialreportingisfacilitatedbytheapplicationofappropriatefinancialreportingStandards,knowninthepublicsectorasStandardsofGRAP.StandardsofGRAParethecommonlanguageusedforfinancialreportinginthepublicsector.Theygiveeffecttotheconstitutionalrequirementtoestablishauniformreportingframeworkforthepublicsector.
This reportsetsouthowtheASB’soperations result indeveloping that language.Toenable theASB to fulfil itsmandate, itperformsthefollowingfunctions:
• SetStandardsofGRAP.• InfluencethedevelopmentofinternationalStandards.• PromotetheadoptionoftheStandardsofGRAPinSouthAfrica.• MonitortheimplementationoftheStandardsofGRAP.• Realisethepotentialofourpeople.• Communicatewithourstakeholders.• Managetheentity.
Set Standards of GRAP
IntheSouthAfricancontext,theASBhasdevelopedacomparableStandardforeverystandardissuedbyIPSASB,theinternationalpublicsectorstandard-setter,andthoseissuedbyIASB,theinternationalprivatesectorstandard-setter,thatarerelevanttothepublicsector.TheASBhasbecomealeaderinStandard-settingbydevelopingStandardswheregapsexistforspecificpublicsectorissuesinresponsetothedemandsoftheASB’sstakeholders.Influence the development of international Standards
ThePFMArequirestheASBtoconsiderbestpracticenationallyandinternationallyindevelopingStandardsofGRAP.Togiveeffecttothisrequirement,theASBusesIPSASsasabasisforthedevelopmentoflocalStandards.It is vital that theASB influences thedevelopment of Standards internationally to ensure that theyare relevant to theSouthAfricanenvironment.TheaimistoreducethechangesneededtobemadetointernationalStandardswhenadaptingthemforimplementationlocally.
TheASBparticipatesintheinternationalStandard-settingprocessintheseways:
• ParticipationinIPSASBboardmeetingsbyanASBstaffmemberservingontheIPSASBboard.• Membershipoftask-basedgroupsusedbyIPSASBtocoordinatethedraftingofIPSASs.• SubmissionofcommentlettersonExposureDraftsandDiscussionPapers.• ProvisionofstaffresourcestotheIPSASBSecretariatwhenaprojectisimportanttoSouthAfrica.
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Promote the adoption of the Standards of GRAP in South Africa
TheConstitutionofSouthAfricarequirestheadoptionofuniformreportingStandards,i.e.StandardsofGRAP,byallspheresofgovernment.
Publicentities,tradingentities,constitutionalinstitutionsandmunicipalitiesandboards,commissions,companies,corporations,funds or other entities under the ownership control of amunicipality haveall adoptedStandards ofGRAP. Parliament hasamendeditsfinancialmanagementlegislationtoincludetheprovinciallegislatures.Asaresult,legislatureswilladoptStandardsofGRAPwitheffectfrom1March2016,usingthetransitionalprovisionsdevelopedforthem.
Thatleavesonlynationalandprovincialdepartmentstofollowsuit.Thecompletionofthefinancialmanagementimprovementsprogramme,and theresulting implementationof transversalaccountingsystemsbynationalandprovincialdepartments,willenablethemtoadoptStandardsofGRAP.
Governmentbusinessenterpriseslistedinschedule2,3Band3DofthePFMAarerequiredtoapplyStatementsofGenerallyAcceptedAccountingPractice(GAAP),orInternationalFinancialReportingStandards(IFRS).TherevisionoftheCompaniesActhasresultedinthewithdrawalofGAAP.TheASBhasbeenresearchingappropriatereportingframeworkstoreplaceGAAP,andhasundertakenwidespreadconsultationinthisregard.OurBoardanticipatesmakingafinaldecisionontheappropriatereportingframeworkinthesecondhalfof2015.
Monitor the application of the Standards of GRAP
TheASBcompleted the firstpost-implementation reviewof theStandardsofGRAPonProperty, Plant and Equipment,andInvestment Property,which resulted in the identificationofareaswhereStandardsofGRAPcanbe improved.The reviewillustratedtheimportanceofaholistic,comprehensiveresponsetofinancialreportingbyensuringco-operationbetweentheASB,theNationalTreasuryandtheAuditor-General.
Realise the potential of our people
ThenatureofStandard-settingischangingandisincreasinglydrivenbyaneedtoincreaseresearchcapabilitiesandtorecruitstaffwithgoodlisteningskills,andwhocanproposepracticalimplementablesolutionsforthoseareaswheretherearestillgapsin theexistingsuiteofStandards. TheASBis fortunate inhavingexperiencedStandard-settersworking for it.Retaining thisexperience,anddevelopingmorepeoplewiththoseskills,iscriticaltothesustainabilityoftheASB.Ithankallmystafffortheircommitmentandhardworkintryingcircumstances.
Communicate with stakeholders
Thepost-implementation reviewprovided theopportunity toengagewithusersof financialstatements–our targetaudiencewhendevelopingStandards.TheASBcontinuedtheconversationwiththembyprovidingfeedbackontheinitiativesundertakenasaresultofthepost-implementationreviewand,inparticular,consultingthemonproposedsolutionstosomeofthedifficultiesexperienced.
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Section 2Performance review for 2014/15InaccordancewiththePFMA,publicsectorentitiesneedtoagreetheperformanceplanwiththeexecutiveauthoritybeforethestartofthefinancialyear,andthenreportonprogressagainsttheplaninitsannualreport.Theexternalauditorsconsiderthisreportwhenexpressinganopiniononperformanceinformation.
Influence the development of international Standards
Influence the development of international Standards to minimise differences between the public and private sector, and to reduce the need for amendments to international Standards in the development of Standards of GRAP.
TheASBinfluencesthedevelopmentofinternationalpublicsectorStandardsbyparticipatinginIPSASBactivities.DocumentsissuedforcommentbyIPSASBarepublishedconcurrentlytoenabletheASBtosubmitcomprehensivecommentlettersreflectingtheviewsoftheSouthAfricanstakeholders.Thefollowingcommentlettersweresubmittedduringthefinancialyear:
• IPSASBStrategyandWorkPlanConsultation(ED123),• IPSASBConsultationPaperonApplicabilityofIPSAStoGBEs(ED125),• ReportingonServicePerformanceInformation(ED121),and• IPSASBImprovementsproject.
MsJeaninePoggiolini,aStandard-setterandemployeeoftheASB,hasbeenappointedDeputyChairpersonofIPSASBforthe2015calendaryear.IPSASBBoardmembersareallocatedtospecifictask-basedgroups(TBGs)toassistthestaffoftheIPSASBtodevelopdocumentsfordiscussionatBoardmeetings.
The ASB participated in the following TBGs:
• Framework:MeasurementofAssetsandLiabilities,• Framework:PresentationinGeneralPurposeFinancialReports,• First-timeAdoptionofAccrualBasisIPSASs,and• PublicSectorSpecificFinancialInstruments.
MsAmandaBotha,aStandard-setterandemployeeoftheASB,providedtechnicalsupportforthedevelopmentofaStandardon the First-timeAdoption of Accrual IPSASs. The projectwas successfully completedwith the publication of the Standardin January 2015. Lessons learnedwill be consideredwhen developing transitional provisions for national and provincialdepartmentswhentheyadoptaccrualaccountingprinciplesandStandardsofGRAP.
TheASBalsoactivelymonitorsdevelopmentsintheprivatesector’sStandard-settingprocesstodeterminewhetheranyoftheiractivitiesmayberelevanttothepublicsector.ParticipationisfocusedontheAccountingPracticesCommittee(APC),atechnicalcommitteeoftheSouthAfricanInstituteofCharteredAccountants(SAICA)andtheFinancialReportingStandardsCouncil(FRSC),theprivatesectorStandard-settingbody.Bothbodiesmonitorandparticipateintheinternationalprivatesectorstandardsettingprocess.RelevantprojectsareaddedtotheASBworkprogrammetoensureadequateresourcesareallocatedtotheprojects.
Toenableustomonitorthedevelopmentofprivatesectorstandardsandtheidentificationofpotentialdifferencethatmayariseinthepublicsector,anASBemployeeattendsboththemeetingsoftheAPCandtheFRSC.WheretherearenoIPSASstousewhendevelopingStandardsofGRAP,weconsiderprivatesectorstandards.TheAPCprovidessecretarialsupporttotheFRSC.TheASBreportsonthoseactivitiesoftheBoardthatmayberelevanttotheprivatesectorstandardsettersatthesemeetings.
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DuringthisperiodtheASBparticipatedinthefollowingAPCsub-committeemeetingsresponsibleforpreparingcommentletterstotheIASBandotherinternationalbodiesforthedevelopmentofprivatesectorfinancialreportingStandards:
• FinancialEffectsofRateRegulation,• ProposedamendmentstoIAS1PresentationofFinancialStatements,• DisclosureInitiative:ProposedAmendmentstoIAS7StatementofCashFlows
Theseprojectseitherhaveapublicsectorimplication,oracurrentStandardofGRAPisbasedontheinternationalequivalentbeingamended.
Set Standards of GRAP
Develop Standards of GRAP which provide accounting and reporting requirements for all material transactions and events that are understandable and implementable.
EachyeartheBoardissuestheGRAPReportingFrameworkinadvanceofthenewreportingperiodtooutlinetheStandardsthatshouldbeappliedbyentitiesinpreparingtheirfinancialstatementsincompliancewithStandardsofGRAP.TheproposedGRAPReportingFrameworkfor2015/2016wasissuedduringthisyear.TheBoardapprovedtheamendmentstotheannexurestobeincludedinDirective5atitsMarch2015meeting.
Asreportedlastyear,theBoardapprovedanExposureDraftoftheproposedStandardofGRAPonAccounting by Principals and Agents.TheBoardconsideredthecommentfromrespondentsinDecember2014andmadechangesinresponsetothecomment received.TheBoardagreedtore-expose thedocument for furthercomment toenablerespondents toconsider theimpactofthesechanges.TherevisedExposureDraftwaspublishedinJanuary2015anditisanticipatedthattheStandardofGRAPwillbeapprovedlaterduring2015.
The Board published aDiscussion Paper on living and non-living resources for comment. The comment is currently beingevaluatedtodeterminewhetherornotaproposedStandardofGRAPshouldbedeveloped.OtherprojectsthatmayarisefromthisprojectincludeanaccountingguidelineandamendmentstoexistingStandardsofGRAP.
TheMinisterapprovedthefollowingStandardsofGRAPforimplementationwitheffectfrom1April2015:
• Segment Reporting,• Transfer of Functions Between Entities Under Common Control,• Transfer of Functions Between Entities Not Under Common Control, and• Mergers.
ThedeterminationbytheMinisterofFinanceoftheimplementationdatesforthefollowingStandardsofGRAPareawaited:
• Statutory Receivables,• Service Concession Arrangements: Grantor and the related Interpretation of the Standard of GRAP on Service
Concession Arrangements Where a Grantor Controls a Significant Residual Interest in an Asset, and• Related Party Disclosures
Animplementationdateoffinancialyearscommencingonorafter1April2016hasbeenproposedafterconsultationwiththeNationalTreasuryandtheAuditor-General.
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Asreportedpreviously,theASBmonitorstheIASB’sprojectstoassesswhetheranyitemsonitsworkprogrammearerelevantto theSouthAfricanpublic sector. Currentlyprojectson the revisionof theStandardson Leasesand Insurancearebeingmonitored.ItisunlikelythattheASBwillissueaStandardofGRAPforInsurance,buttheexistingStandardofGRAPonLeases willbeaffectedbytheIASBproject.TheASBencouragedpublicentitiesthathaveinsurancetypeactivitiestoreviewtheirownaccountingpoliciesandalignthemwiththeinternationalstandard.
TheIASBcompletedtheprojectonRevenuefromContractswithCustomerswiththepublicationofIFRS15.TheASBpreparedaresearchreportwiththeaimofdeterminingwhetherthecurrentthreeStandardsofGRAP,namely,Revenue from Exchange Transactions, Revenue from Non-exchange TransactionsandConstructions Contracts,couldberevisedbyissuingasingleStandardofGRAPbasedonIFRS15.TheresearchwillbemadeavailabletotheIPSASBtouseaspartoftheprojecttoreviewtherevenueStandards.Theresearchisalsobeingsharedwiththenationalstandard-settersofNewZealandandAustralia.Theresearchreportwillassistinensuringthatthecontributionswemakeinternationallyaresound.
Thecompletionofthepost-implementationreviewoftheStandardsofGRAPonProperty, Plant and EquipmentandInvestment PropertyresultedinanumberofprojectsontheASBworkprogramme:
• ADiscussionPaperonMateriality-ReducingComplexityandImprovingReportingwaspublishedforcomment.• AnExposureDraftproposingAmendmentstoGRAP21andGRAP26waspublishedforcomment.• AnExposureDraftproposingAmendmentstoGRAP16andGRAP17waspublishedforcomment.• AnExposureDraftInterpretingRecognition and Derecognition of Landisbeingdeveloped.• Researchintodevelopinganaccountingguideonhousingisbeingconducted.
Theamendments toGRAP16and17wereapprovedbytheBoardat theMarchmeeting.RecommendationsonactivitiesarisingfromtheMaterialityprojectwerealsoapproved.Workontheotherprojectsiscontinuing.
Facilitate the implementation of Standards of GRAP
Monitor and facilitate the implementation of these Standards by public sector entities through the development of transitional provisions and transitional arrangements when the Minister of Finance approves a new Standard.
MembersofParliament,theLegislaturesandmunicipalcouncillorsaretheelectedrepresentativesofSouthAfricans.Theyareidentifiedasprimaryusersof financial statements issued in thepublic sector.Abrochureexplaining the roleof theASB indevelopingfinancialreportingStandardswasdevelopedanddistributedtoMembersofParliamentandthelegislatures.Thebrochurewillalsobedistributedtomunicipalcouncillorsafterthelocalgovernmentelectionsin2016.
Inthecurrentyear,theASBstartedthetranslationoftheStandardsofGRAPintoisiZulu,SeSothoandAfrikaans.BytranslatingtheStandardswehopetoenablepreparersoffinancialstatementsforthepublicsectorwhosefirstlanguageisnotEnglish,toobtainabetterunderstandingofthem.Thisinitiativeisbothtimeconsumingandexpensive,butessentialinacountrywith11officiallanguagesandwhereEnglishfirstlanguageusersapproximateonly9.6%.
TheConstitutionofSouthAfricamandates theNationalTreasury to implementauniformreportingframework forallspheresofgovernment.TheCompaniesActof2012resultedinthewithdrawalandreplacementofStatementsofGAAPwithIFRS.GovernmentBusinessEnterprises(GBEs)havebeenaffectedbythischangeandneedtoadoptanewreportingframework,eitherIFRSorGRAP.TheASBhasconductedresearchontheappropriatereportingframeworkforGBEsandissuedproposalsforconsideration.Basedonthecommentreceivedfromrespondents,theASBhasdevelopedcriteriatoenableGBEstoperformaself-assessment.ThecriteriaarecurrentlybeingtestedinthefieldbyGBEs.TheresultswillbeconsideredbytheBoardinJuly2015.
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Monitor the application of the Standards of GRAP
Monitor and evaluate the consistent application of the Standards of GRAP on an ongoing basis by considering the implications of non-compliance.
TheASBreliesontheGeneralReportsissuedbytheAuditor-GeneralforinformationontheapplicationofStandards.TheASBalsoreliesonfeedbackfromalltheinteractionwithpreparers,auditorsandotherusers.Duringthetwoauditcycles,firstlythePFMAandthereaftertheMFMA,theASBmeetregularlywiththestaffoftheOAGandtheAGSAtodiscussissuesarisingduringtheaudit.
Fromtheseexchanges,theASBdevelopsfrequentlyaskedquestions(FAQs)toprovideurgentguidance,ifneeded.Inthecaseofminorandnon-urgentissuestheStandardsofGRAParealsoamendedduringtheImprovementsProjecteverytwoyears.MoresignificantissuesthatmayresultinanamendmenttoaStandardoraninterpretationareaddedtotheworkprogramme,withtheconsentoftheBoard.Furthertothis,theASBisrequiredtoconsiderthecapacityoftheentitiesinthepublicsectortoimplementStandardsofGRAP.ThisisdonebydevelopingtransitionalprovisionstoassistwiththeimplementationoftheStandards.
OtherinitiativestopromotetheapplicationofStandardsofGRAPincluded:
• LiaisonwiththeNationalTreasuryonthedevelopmentofastandardchartofaccountsforlocalgovernment,and• ThesubmissionofarticlesforpublicationbySAICA,IMFOandSAIGA.
Realising the potential of the employees of the Accounting Standards Board
Realising the potential of the employees of the ASB by continuing to focus on employee retention and improving employees’ knowledge, skill and capabilities.
Each staffmember of theASB has a personal development plan to ensure that their training and development needs aremonitored.Thereisregularreportingagainsttheirdevelopmentplans.
RetentionofkeystaffisasignificantriskoftheASB.ThisismonitoredandmanagedbytheBoard.ThecurrentorganisationalchartoftheASBhascapacityforfourStandard-setters.TheASBhasnovacanciesatpresent.
Communicate with our stakeholders
Ongoing communication with our stakeholders.
ApartfromaregularnewslettersenttoregisteredrecipientsaftereachBoardmeeting,articlesaresubmittedforpublicationoncurrenttopicalissues.Adetailedstakeholderoutreachprogrammehasbeenimplemented.Thedetailsofwhicharediscussedinthisannualreportonpage13.
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Manage the ASB as a public entity in an efficient, effective and economical way
To ensure that Standards are developed in an efficient, effective and economical way by operating within the fiscal parameters established by the transfer of funds from the National Treasury Vote.
TheASB’scompliancewithgoodcorporategovernance,appropriatetothesizeofouroperations,iscoveredinaseparatereport.
Receivinga so-called “cleanaudit”, i.e. an unqualifiedaudit report for financial information, performance informationandcompliancewithlawsandregulations,isanimportantobjectivefortheASB.NotonlydoestheASBwanttosetStandardsforfinancialreporting,itwishestodosointhemostefficientandeffectiveway.
TheinternalauditfunctionandtheauditandriskcommitteearesharedwiththeNationalTreasury.Nofeesarepaidfortheseservices.
Internalauditperformedthefollowingaudits.Allthefindingswerehousekeepinginnatureandhavebeenaddressed:
• AnassessmentofthestateofreadinessoftheASBforthe2013/14auditwasperformed.• Auditofperformanceinformation.Alltherecommendationshavebeenimplemented.
IndependentassuranceisprovidedbyNexiaSAB&T.Thisreportappearsonpage35oftheannualreport.
TheASBhasprocessesinplacetomonitorcompliancewithlawsandregulations.Newlegislationpromulgatedisreviewedtodeterminewhetherornotadditionalprocedurestoensurecomplianceareneeded.Inthepastfinancialyear,TheUseofOfficialLanguagesresultedinasignificantburdenbeingplacedontheASBasallStandardsofGRAParetobepublishedinEnglish,isiZulu,SeSothoandAfrikaans.TheProtectionofPersonalInformationActalsorequiredsomechanges,butthefinancialimpactislesssignificant.ThepublicationoftheRevisedTreasuryRegulationsisawaited.Itmayresultinadditionalrequirementsforcompliancewithlawsandregulations.
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Stakeholder OutreachDuringtheyeartheASBhasactivelyengagedanumberofitskeystakeholders,includingpreparers,users,auditorsandotherinterestedparties.NotonlydotheseengagementsenhancetherelevanceoftheStandardsofGRAPandthecredibilityoftheStandard-settingprocess,buttheycontributemorebroadlytoimprovedfinancialmanagementinthepublicsector.
TherelevanceoftheStandards,andthecredibilityoftheStandard-settingprocess,isenhancedbyengagingwithstakeholdersabout proposedStandards ofGRAP, potential revisions of those Standards, and how theseare applied in practice. ThisengagementensuresthattherequirementsoftheStandardsareappropriateandrelevanttotheSouthAfricanpublicsector,andenableproperassessmentsofaccountabilityanddecision-making.Financialmanagementoftheresourcesentrustedtopublicsectormangers isenhancedbyengagingwithstakeholdersabout resolvingapplication issues,andhowfinancialstatementinformationlinkswithotherdisciplines.
Thisisthebroadclassificationofengagementsundertakenduringtheyear:
• Dueprocessactivities,i.e.discussingExposureDraftsandotherproposalswithstakeholdersindevelopingpronouncementsoftheBoard.
• Outreach activities, i.e. disseminating information about the work of the Board, including the role of AccountingStandardsandnewdevelopments.
• Roundtablediscussions,i.e.discussionsonspecificnationalandinternationaltopicstoprovidefeedbackintotherelevantStandard-settingprocesses.
TheASBundertook its firstpost-implementation reviewof theStandardsonProperty, Plant and Equipmentand Investment Property lastyear.ThefeedbackreceivedduringtheengagementswithusersandpreparersresultedinanumberofprojectsbeingundertakenbytheBoardtoaddresstheissuesraised.Thecommentsreceivedaspartofthisprocess,aswellastheBoard’sresponsestothem,areavailableontheASB’swebsiteonwww.asb.co.za.
TheBoardhasagreedthatpost-implementationreviewswillnotbeundertakeneveryyear,andareviewofeveryStandardwillalsonotbedone.DecisionsbytheBoardonwhethertoconductsuchareviewandwhichStandardsofGRAPtobereviewedwillbedeterminedusing information suchas that contained in theGeneral Reportof theAuditor-General. TheBoardwillconsiderwhetheranyreviewsneedtobeundertakenin2015/16.
The resultsof thepost-implementation reviewof theStandardsonProperty, Plant and Equipmentand Investment PropertyindicatedthattheBoardneedstodomoretoengageandconsultwithusersofthefinancialstatements.Thisincludeseducatingusersonthevalueanduseoftheinformationinthefinancialstatements.TheBoardalsoneedstoensurethatusersreceivealltheinformationtheyneedtomakedecisions.
Itisoftendifficultandresourceintensivetoconsultwithusersonanindividualbasis.TheBoardisthereforeexploringalternativewaystoaccessspecificusersasacollective,suchasthroughanadvisorygrouporsimilarway.ThepurposeofsuchagroupwouldbetoprovidefeedbacktotheBoardontheusefulnessofinformation.Suchconsultationcouldbelimitedtoonceayear.Duringthe2014/15period,39engagementswereundertakenwitharangeofstakeholders(2014:56engagements).Thisrepresentsareductionof30%comparedtothepreviousyear.Thereductionisduetotheincreasednumberofengagementsintheprioryearaspartofthepost-implementationreview.Adetailedlistoftheengagements,therelevantstakeholdersinvolvedandthenatureoftheengagementsisincludedonpages15to17.
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Engagements with stakeholders
Topic Constituency Region meeting held
Due process engagements
ED122AccountingbyPrincipalsandAgents
SARS Gauteng
PublicSectorAccountingForum(representingstakeholdersacrossthecountry)
Gauteng
SAICA Southern,EasternandNorthernRegions,andtheNorth-WestProvince
ED124TheApplicationoftheStandardsofGRAPtoGBEs
SAICA Southern,EasternandNorthernRegions,andtheNorth-WestProvince
FinancepractitionersemployedatGBEs(representingstakeholdersacrossthecountry)
Gauteng
PublicSectorAccountingForum(representingstakeholdersacrossthecountry)
Gauteng
ED126ProposedAmendmentstoGRAP16InvestmentPropertyandGRAP17Property,PlantandEquipment
SAICA Southern,EasternandNorthernRegions,andtheNorth-WestProvince
IMFO WesternCape
ProvincialTreasuryTechnicalForum WesternCape
SALGA Gauteng,FreeState
ED127ProposedAmendmentstoGRAP21ImpairmentofNon-cashGeneratingAssetsandGRAP26ImpairmentofCash-generatingAssets
SAICA Southern,EasternandNorthernRegions,andtheNorth-WestProvince
IMFO KwaZulu-Natal
ProvincialTreasuryTechnicalForum WesternCape
SALGA Gauteng,FreeState
ED129AccountingbyPrincipalsandAgents
ICASA Gauteng
DiscussionPaper9Materiality–ReducingComplexityandImprovingReporting
SAICA Southern,EasternandNorthernRegions,andtheNorth-WestProvince
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Topic Constituency Region meeting held
IMFO KwaZulu-Natal
ProvincialTreasuryTechnicalForum WesternCape
Financepractitioners,consultants,auditorsandotherinterestedparties(representingstakeholdersacrossthecountry)
Gauteng
SAICAAssuranceGuidanceCommittee(Nationalcommittee) Gauteng
IRBACommitteeforAuditingStandards(Nationalcommittee) Gauteng
DiscussionPaper10–LivingandNon-livingResources
SAICA Southern,EasternandNorthernRegions,andtheNorth-WestProvince
IMFO KwaZulu-Natal
ProvincialTreasuryTechnicalForum WesternCape
Financepractitioners,consultants,auditorsandotherinterestedparties(representingstakeholdersacrossthecountry)
Gauteng
TshwaneMetropolitanMunicipality Gauteng
Outreach activities
UpdateoftheactivitiesoftheASB Non-delegatedmunicipalCFOForum(representingstakeholdersacrossthecountry)
Gauteng
IMFOAuditandAccountingConference KwaZulu-Natal
IMFORegionalConference KwaZulu-Natal,WesternCape
LegislativeSectorFinanceForum(representingstakeholdersacrossthecountry)
KwaZulu-Natal
AGSAProductChampions(representingstakeholdersacrossthecountry)
Gauteng
SALGAFinanceWeek Gauteng,KwaZulu-Natal
PublicEntityForum(NationalForum) Gauteng
ProvincialAccountant-GeneralForum(NationalForum) Gauteng
RoleoftheASB AssociationofPublicAccountsCommittees(NationalForum) Gauteng
Interpretingfinancialstatements CityofJoburg Gauteng
Sharingbestpracticedevelopmentsonaccountingforassets
ProvincialTreasury FreeState
IsAfricareadyforIPSASs? EasternandSouthernAfricanAssociationofAccountants-General
Regional
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Topic Constituency Region meeting held
Roundtable Discussions
IPSASB’sProposedRecommendedPracticeGuidelineonReportingServicePerformanceInformation
NationalTreasuryandDepartmentofPerformanceMonitoringandEvaluation
Gauteng
Financepractitioners,auditorsandfirms(representingstakeholdersacrossthecountry)
Gauteng
AGSA Gauteng
IPSASB’sStrategyandWorkPlan PublicSectorAccountingForum(representingstakeholdersacrossthecountry)
Gauteng
IPSASB’sConsultationPaperonTheApplicabilityofIPSASstoGBEsandOtherPublicSectorEntities
PublicSectorAccountingForum(representingstakeholdersacrossthecountry)
Financepractitioners,auditorsandfirms(representingstakeholdersacrossthecountry)
Gauteng
Gauteng
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Schedule of Project Groups and Participants
Participant Organisation
Accounting by Principals and
AgentsMateriality DP
Accounting for Living and Non-living Resources
Amendments to GRAP 16, 17, 21
& 26
1 meeting 1 meeting 3 meetings 2 meetingsDAnandlal Cityof
Johannesburg1of2
ZBeseti KPMG 1of3LBodewig NationalTreasury 1of3CBraxton PwC 1of2GBurger SAICA 1of1 1of3 1of2AColyvas EY 1of1 1of1BColyvas WConsulting 1of3RD’Alessandro EY 2of2JdeRidder CityofCapeTown 1of2SADube Mbombela 1of2CduPlooy Ekurhuleni 1of2MGerber Deloitte 2of3 1of2AMHaji KPMG 2of3CHenning Altimax 1of1GHiggins EY 1of2KKgatuke Cityof
Johannesburg1of2
IKotze IMFO 1of1 1of2KKramer NelsonMandela 1of2WLinden EY 2of3KMaree NationalTreasury 1of2SMajola NationalTreasury 1of1NMakhuvha Deloitte 2of2JMajapelo SAICA 1of2NMaphosa Cityof
Johannesburg1of2
JMatsie SALGA 1of1 2of2MMentz AGSA 1of1 2of3 2of2FMudua Polokwane 1of2MMuller Altimax 1of1 2of3INchoe SAICA 2of3JPelser CityofTshwane 2of2RPeterson NationalTreasury 1of1 1of3KPillay FSB 1of1ERichards CityofTshwane 2of2WJJSmit EY 1of2ASmith SANBI 2of3BvanderMerwe Protect-A-Partner 1of3 2of2BvanderMerwe Polokwane 1of2
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Section 3Report on sustainabilityThesustainabilityoforganisationsisgenerallyassessedbasedonthreeaspects:financialviability,impactontheenvironment,andimpactoncommunities.GiventhenatureoftheASB’sactivitiesanditssize,itisoftendifficulttoassesssustainabilityusingonlythesethreeelements.Inparticular,becausetheASBisfundedthroughallocationsfromtheNationalTreasury,whichareindirectlyfundedthroughtaxpayerandotherpubliccontributions,andthereisinsufficientfundingavailabletoundertakesocialresponsibilityinitiatives.
MeasuringsustainabilityattheASBoverthepastyearshasfocusedontheimpactontheenvironment.ThesharpfocusoverthelasttwoyearsbytheNationalTreasuryongovernmentspending,however,hasimpactedboththeeconomicviabilityoftheASB,aswellasthedecisionsabouthowresourcesareusedtoachieveitsactivities.ThishashadbothpositiveandnegativeeffectsontheASB:
• Positively,theefforttoreducespendinghas,generally,hadapositiveimpactontheASB’sefforttoreduceitscarbonfootprint,withadditionalpositiveimpactslikelyintheupcomingyears.
• Negatively,thefocusongovernmentspendinghasresultedinreductionsintheallocationsfromtheNationalTreasury,whichmeansthatcertainactivitiesmayneedtobecurtailedfrom1April2015.
Forthe2015/16period,thebudgetedreductionsinallocationsfromtheNationalTreasurymeansthattheASBislikelytohaveashortfallinthefundingofitsoperationalexpenditure,whichiscurrentlyestimatedatR438,000.ThisshortfallisexpectedtoincreasetoR657,000forthe2016/17period.Thereafter,theoperationalexpenditureisexpectedtobefullyfunded.
MostoftheASB’scostsarefixed.Thereisthereforealimitedabilitytoreducediscretionaryspending.Consequently,activities,such as outreach and stakeholder engagement which require air travel, need to be curtailed. Outreach and stakeholderengagementiscriticaltotherelevanceoftheStandardstheASBdevelops,andlendscredibilitytotheprocesstheASBfollowstosetthoseStandards.Inanefforttobalancetheneedforoutreachandengagementwithconstituentsandthecostthereof,theASBwillendeavourtopartnerwithorganisationsduringthe2015/2016year inundertakingwebinarsandsimilar interventions to interactwithitsconstituents.ThisshouldnotonlyreducetravelcostsandtheASB’simpactontheenvironment,butwillalsomeanthattheSecretariatwillbeabletoreachmoreconstituentsthroughasingleintervention.Whiletheseinterventionswillassistinreducingthecostofoutreachactivities,travelisunavoidableincertaininstances.TheASBcontinuestoengagewiththeNationalTreasurytoassesshowthesecostscanbefunded.
TheASBhas,initsfocusonreducingitscarbonfootprint,raisedvariousconcernswiththelandlordofthepropertyitoccupiesontheamountofwaterandelectricityconsumedinpreviousyears.Asaresult,thelandlordinspectedandreplacedboththewaterandelectricitymeters.Theeffectisthatboththeconsumptionofwaterandelectricityhasbeensignificantlyreducedfortheyearunderreview:waterconsumptionhasbeenreducedby52%,andelectricityby22%(seeTable1onthenextpageforthedetailedconsumption).
Despiteeffortstoreducetheconsumptionofpaper,suchassettingthedefaultsettingsonallprinterstodoublesided,therewasa20%increaseinpaperusage.Todate,papersfortheASB’sBoardandManagementCommitteemeetingshavebeenprintedandsenttomembers.FromthebeginningofMarch2015,theASBdecidednottoprintmeetingpapers,butinsteadtomakethemavailableelectronicallytomembersonitswebsite.
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Asindicatedearlier,travelisanessentialpartoftheASB’sactivities.Domesticairtravelisnecessarytoensurethatadequateconsultationwithstakeholderstakesplace.InternationalairtravelisnecessaryforparticipationintheIPSASBmeetings,almostallofwhichareheldinNorthAmericaeachyear.Whereverfeasible,teleconferencesareheldtoreducetheextentofinternationaltravel,butthisisnotalwayspossible.Thevolumeofairtravelundertakendependsonspecificprojectsandactivitiesundertakenduringthereportingperiod.
Duringthe2013/14reportingperiod,theSecretariattravelledextensivelyinSouthAfricatoobtaintheviewsofstakeholdersforthepost-implementationreview.Thisresultedinahigherthanusuallevelofdomestictravelintheprioryear.Asaresult,a14%reductionisseenindomestictravelinthe2014/15reportingperiodwhencomparedtothepreviousyear.TheASBprovidedtechnicalresourcestotheIPSASBfortheFirst-timeAdoptionofIPSASsprojectduring2013/14andpartof2014/15,whichalsoresultedinanincreasedlevelofinternationalairtravelintheprioryear.TheprojectwascompletedinSeptember2014,resultinginareductionof16%ininternationalairtravel.
Thenegativeeffects thatair travelhasontheenvironmenthavenotbeenoffset inanyway,ascontributingtocarbonoffsetprogrammesofferedbyairlinesisoftenprohibitiveintermsofcost,andtheBoardhasinsufficientresourcestospendonsuchprogrammes.
Thetablebelowsetsouttheusageofthoseresourcesthatwecanmeasuredirectly.Itisincomplete,becausewecannotmeasurethecarbonfootprintoftheconstructionofthebuildingwerent,ortheresourcesconsumedbysomeofourstakeholderswhoattendourBoardmeetingsorprojectgroupmeetings.
Table1-Consumptionlevelsfortheyearunderreview,comparedtothoseoftheprioryear
2014/15 2013/14 Change
Water 88kL 184kL 52%decrease
Electricity 19784kW 25314kW 22%decrease
Paper 407kg 338kg 20%increase
Internationalairtravel 181184km 214586km 16%reduction
Domesticairtravel 41324km 47784km 14%reduction
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Section 4Key strategic objectives for 2015/16TheASBcontinuesthedeliveryonitsstrategysetoutinthestrategicplan,tabledinParliament.
Strategic outcome oriented Goal 1
Improvefinancialreporting.
Goal statement Toenhancefinancialreportinginallthreespheresofgovernmentonacontinuousbasistoengenderconfidenceinfinancialreportingandimproveaccountabilityanddecision-making.
Strategic objectives •SetStandardsofGRAP.•InfluencethedevelopmentofinternationalStandards.•FacilitatetheimplementationoftheStandardsofGRAP.•MonitortheapplicationoftheStandardsofGRAP.•RealisethepotentialoftheemployeesoftheAccountingStandardsBoard.•Communicatewithourstakeholders.•Promotegoodgovernanceandfinancialmanagement
Impact to be achieved To strengthen democracy by engendering confidence in financial reporting in the publicsector.
ThefollowingisasummaryofthestrategicinitiativesthattheASBwillbeundertakingduringthe2015/16performanceyeartoensuretheachievementofourgoalstat.
Strategic Objectives
Strategic initiatives
SetStandardsofGRAP
•Research the SouthAfrican implications of the IPSASBConceptual Framework to identify SouthAfricanspecificactivitiesandtherelatedprojectsforinclusionintheworkprogramme.
•ResearchpublicsectorandSouthAfricanimplicationswhenIASBissuesanew/revisedstandardonLeasesandInsurance.
•Respondtoissuesarisingfromtheresearchintointernationalamendments,whichincludesreplacingthe Conceptual Framework, and issuing replacement Standards for Revenue from Exchange Transactions, Construction ContractsandLeases,andamendingtheStandardonRevenue from Non-exchange Transactions (Taxes and Transfers).
•RespondtothecommentsreceivedontheDiscussionPaperonLivingandNon-livingresources.•RespondtocommentsreceivedontheDiscussionPaperonMateriality–ReducingComplexityand
ImprovingReporting.
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Strategic Objectives
Strategic initiatives
•DevelopanInterpretationonOwnershipofLandandaGuidelineonHousing,projectsarisingfromthepost-implementationreview.
•ClarifythemandateoftheASBwithregardstotheexpansionoffinancialreportingfromfinancialstatementsthroughtheactivitiesofthead-hoccommitteeoftheBoard.
•MaintainexistingsetofStandardsforminorimprovementsarisingfromstakeholderconsultation.•Research the process needed to enable government to prepare a “whole-of-government”
consolidation.•Respond to internationalamendmentsby IASBand IPSASB toStandardsofGRAPbasedonan
internationalequivalent.
InfluencethedevelopmentofinternationalStandards
•IdentifyapersontobenominatedasapotentialmemberofIPSASBwhenthecurrentmember’stermexpiresin2016.
•IntheabsenceofarepresentativeonIPSASB,attendmeetingsasapublicobserver.•ParticipateintaskbasedgroupsestablishedbyIPSASBtoprovidetechnicalsupporttotheSecretariat
whendraftingpronouncements.•ProvideresourcestotheIPSASBsecretariatonprojectsthathaveanimpactontheASB’sstandard-
settingprocess.•Continue attending the Financial Reporting Standards Council as a public observer to monitor
private sector developments in standard-setting thatmay havean impact onour own standard-settingprocess.
•Publishconcurrently,forcomment,anydocumentspublishedforcommentbyIPSASBtoenableustosubmitacommentletter.
•ActivateaSouthAfricanStandard-settingprocesswhendocumentspublishedbyIPSASBareissuedasfinalpronouncements.
•ParticipateinSAICA’sAccountingPracticesCommitteetounderstandSouthAfricanissuesthatarerelevanttothestandard-settingprocess.
•MonitorIASBprojectsthathaveaSouthAfricanpublicsectorimpact.•SubmitacommentletteronIASBdocumentsthathaveanimpactonpublicsectorfinancialreporting.•Submit,inconjunctionwithSAICA,commentlettersonIASBdocumentsissuedforcomment.
FacilitatetheimplementationoftheStandardsofGRAP
•Consider the implicationsof the IPSASonFirst-timeAdoptionofAccrualBasis IPSASsoncurrentdirectivesissuedbytheASBfortransitiontoStandardsofGRAPwhencompletedbyIPSASB.
•ResearchthedisclosuresthatcanbemadewithouthavingaccesstotheplannedIFMStoenablethenationalandprovincialdepartmentsandcomponentstocommencetheadoptionofStandardsofGRAP.
•Develop a programme of workshops to create awareness amongst national and provincialdepartmentstoadoptStandardsofGRAP.
•Commentonanydevelopmentsthatinfluencefinancialreportinginthepublicsector.
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Strategic Objectives
Strategic initiatives
•Advocatetheadoptionofaccrualaccountingingeneral,andStandardsofGRAPinparticular,bythoseentitiesthathavenotyetmovedtoaccrualaccountingortheadoptionofStandardsofGRAP.
•Provideresources,whenavailable,totheNationalSchoolofGovernmentwhenrollingoutGRAPtrainingtoofficials.
MonitortheapplicationoftheStandardsofGRAP
•DevelopaframeworktobeusedwhenselectingaStandardofGRAPforapost-implementationreview.
•Institutionalisepost-implementationreviewsinthefunctionsoftheASB.•AnalysethefollowingtodeterminewhetherpotentialguidanceonStandardsofGRAPisneeded
basedon:•consolidatedgeneralreportsissuedbytheAuditor-General;and•feedbackfromstakeholderoutreach.
•DevelopandupdateFrequentlyAskedQuestionsasandwhenaneedisidentified.•Promotetheneedforacademicresearchintoidentifiedareasofpublicsectorfinancialreporting.
RealisethepotentialoftheemployeesoftheAccountingStandardsBoard
•RecommendtotheMinisterofFinancetheappointmentofBoardmemberswhenvacanciesexistontheBoard.
•Implementdevelopmentplansforallstaff.•Monitorstaffsatisfactionofkeystaffandinitiateactionswhendeemedappropriate.•ParticipateintheHeadsofEntityForumtomaximiseopportunitiestofindskilledfinancialstaffand
providetrainingopportunities.•Fillanyvacanciespromptly.•ArrangeinductiontrainingforallnewBoardmembers.
Communicatewithourstakeholders
•To enhance financial reporting in all three spheres of government over the next 5-10 years toimprove accountability and decision-making, target our outreach to users, and any other gapsidentifiedannuallyinthecommunicationstrategy.
•FocusontheconsultationprocessduringthedevelopmentoftheStandardsandpost-implementationreviews.
•ContinuetoencourageNationalandProvincialDepartmentstoparticipateeventhoughtheyareunlikelytowanttoparticipateuntiltheyarerequiredtodoso.
Promotegoodgovernanceandfinancialmanagement
•Maintainunqualifiedauditreportsforbothperformanceandfinancialinformation.•Continue to maintain efficient and effective governance structures (Board, audit committee,
managementcommittee)andinternalaudit.•Co-operatewithotherheadsofentitiesreportingtotheMinisterofFinancetoidentifyareaswhere
wecanshareresources.•DevelopimplementationplansforanynewlegislationapplicabletotheASB.
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Section 5GovernanceTheimplementationofeffectivegovernanceprocessesandsystemshasensuredthattheASBanditsemployeesaredirected,controlledandheldtoaccount.ThesestructuresaresupportedbytheASB’sstrategicandannualperformanceplan.TheASBisresponsibleforestablishingitsownoperatingprocedures.
TheBoard,whichistheaccountingauthorityoftheASB,isresponsibleforcorporategovernance.TheBoardfulfilsthisresponsibilitybyapprovingandimplementingthenecessarypoliciestoensurethattheASBadheresnotonlytothelegislativerequirementsassetoutinthePublicFinanceManagementAct,butalsototheprinciplesintheProtocolonCorporateGovernanceencapsulatingtheprinciplesoftheKingReportonCorporateGovernance.
Portfolio committees
ParliamentexercisesitsrolethroughevaluatingtheperformanceoftheASBbyconsideringitsannualfinancialstatementswhich,togetherwithotherdocuments,havetobetabledfromtimetotime.TheStandingCommitteeonPublicAccounts(SCOPA)isrequiredtoreviewtheASB’sannualfinancialstatementsandtheauditreportsoftheexternalauditoronaperiodicbasis.
Executive authority
TheMinisterof Finance is theexecutiveauthority responsible for theASB.TheMinister is responsible forappointingBoardmembersandforensuringthatthoseappointedhavethenecessaryskillsandexpertiseinaccountingandpublicsectorfinance.BoardmembersshouldalsohavetheknowledgeandunderstandingoffinancialreportingandgovernancetoguidetheASBasapublicentity.
Audit and risk committee
Theauditandriskcommitteeisresponsiblefor,amongothers,improvingmanagementreportingbyoverseeingtheinternalandexternalauditfunctions,ensuringtheeffectivenessofinternalcontrolsystemsandensuringtheadequacy,reliabilityandaccuracyoffinancialandperformanceinformationprovidedbymanagementtotheusers.DuetothesizeandnatureoftheASB,itsharestheNationalTreasury’sauditandriskcommittee.NationalTreasuryremuneratesthemembersoftheauditandriskcommittee.
ThepreviouschairmanoftheBoard,MrVJack,wasalsothechairmanoftheNationalTreasury’sauditandriskcommittee.TheauditandriskcommitteeelectedadifferentchairpersonwhenitconsideredmattersrelatedtotheASB.InformationonattendanceofauditandriskcommitteemembersatmeetingsandremunerationareincludedintheannualreportoftheNationalTreasury.WiththeappointmentofanewBoard,someoftheBoardmemberswillbenominatedtofillvacanciesontheNationalTreasuryauditandriskcommittee.
The Board
TheBoardconsistsof10non-executivemembers.TheyareresponsiblefortheperformanceoftheASBandensuringthatitmeetstheobjectivessetoutinthestrategicplan.
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The primary functions of the Board, in its capacity as Standard-setter, are to develop and approve Standards of GRAP,InterpretationsofStandardsofGRAP,Directives,DiscussionPapers,ExposureDrafts,andguidelinesforthoseentitiesrequiredto complywith the Standards.Once a Standard has been approved by the Board, an implementation date needs to berecommendedtotheMinisterofFinance.SucharecommendationfollowsconsultationwiththeAuditor-GeneralandNationalTreasury.
TheBoardisalsobroadlyresponsibleforpromotingtransparencyinandeffectivefinancialmanagementofrevenue,expenditure,assetsandliabilitiesinthepublicsector.ToensurethattheBoardmaintainsitsintegrityandfulfilsitsaccountabilityresponsibility,ithasdelegatedsomeofitsfunctionstotheManagementCommitteetoassistwiththeeffectiveperformanceofitsfunctions.TheManagementCommitteecurrentlyconsistsofthechairpersonandthreeotherBoardmembers.Thefunctionsthathavebeendelegatedinclude:
• Formulate,monitorandreviewthestrategicplan,majorplansofactionandriskpoliciesforrecommendationtotheBoard.• MonitortheoperationsoftheASB,asdelegatedtotheCEO,toensurethatitcomplieswithallapplicablelaws,
regulationsandothergovernmentpolicy.• Monitortheimplementationandongoingcompliancewithapprovedpoliciesandstrategies.• MonitorcompliancewiththedelegationofauthoritiestotheCEO.• ConsiderandrecommendthebudgettotheBoardforapproval.• MonitortheASB’sactualperformanceagainsttheapprovedbudgetthroughthereviewofmanagementreports.• EnsurethetimelypreparationofannualfinancialstatementsandsubmissiontotheBoardasrequiredinlegislationand
throughotherprescripts.• ConsiderandrecommendactiontotheBoardinresolvinginternalandexternalauditfindings.• ManagepotentialconflictofinterestandreportsinstancestotheBoardwhereappropriate.• ReviewthematerialityandsignificanceframeworkannuallyandrecommendamendmentstotheBoard.• MonitortheSecretariat’sperformanceagainsttheapprovedworkprogramme.• Considerremunerationandincentiveawardsforemployees,recommendingtheirapprovaltotheBoardandoverseeing
compliancewithhumanresourcepolicies.
Composition and remuneration of Board members
RemunerationofBoardmembersisdeterminedbytheMinisterofFinance.EmployeesofNationalandProvincialGovernmentandanyoftheiragencies,entitiesororgansofStatearenotremunerated.TheseareKKumar,SBadatandhisalternate,LLeRoux,theAccountant-General,MrMichaelSassandhisalternate,LBodewig,GPaulandRRasikhinya.WiththeappointmentofthenewBoardon1March2015,thefollowingmembersarenotremunerated:RRasikhinya,SBadatandhisalternate,LLeRoux,theAccountant-General,MrMichaelSassandhisalternate,LBodewig.
ActualexpensesincurredbyBoardmemberstoattendmeetingsarerefunded.
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Composition and attendance of Board meetings
Name of Board member
Designation in terms of Public Entity Board structure
Date appointed Qualifications Area of Expertise No. of Board meetings attended
VJack ChairpersonoftheBoard Re-appointedforasecondtermon1
CA(SA) Publicsectorfinance
3of4
Independentnon-executivememberChairpersonoftheauditandriskcommitteeChairpersonoftheManagementCommittee
March2012
Termendedon28February2015
TCoetzer Deputy-ChairoftheBoardfrom1December2014to28February2015ChairpersonoftheBoardfrom1March2015Independentnon-executivememberChairpersonoftheManagementCommitteefrom1March2015
Re-appointedforasecondtermon1March2015
CA(SA) Publicandprivatesectorfinance
4of4
BColyvas Independentnon-executivememberMemberoftheManagementCommittee
Re-appointedforasecondtermon1March2015
CA(SA) TechnicalDirector:WConsulting
4of4
CJKujenga Independentnon-executivememberMemberoftheManagementCommittee
Re-appointedforasecondtermon1March2012Termendedon28February2015
CA(SA) Auditpartner:Ernst&Young
2of4
KKumar Independentnon-executivemember
Re-appointedforasecondtermon1March2012Termendedon28February2015
BComAccounting
Municipalaccounting
2of4
SBadat(Alternate:LLeRoux)
IndependentNon-executivemember
March2014 CA(SA) Publicsectoraudit 1of4
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LLeRoux Independentnon-executivemember
March2014 CA(SA) Publicsectoraudit 1of4
MSass(Alternate:LBodewig)
Non-executivemember March2014 CA(SA) Publicsectoraccounting
2of4
LBodewig(AlternatetoAccountant-General)
Non-executivemember February2007 CA(SA) Publicsectoraccounting
3of4
GPaul Independentnon-executivemember
Re-appointedforasecondtermon1March2011Termendedon28February2015
BSC,FCA,MBA
Publicsectoraccounting
3of4
NRanchod Independentnon-executivemember
Re-appointedforasecondtermon1March2015
CA(SA) Accountingandaudittechnicalpartner:Deloitte
3of4
RRasikhinya Independentnon-executivememberMemberoftheManagementCommittee
Re-appointedforasecondtermon1March2015
CA(SA) Publicsectoraccounting
4of4
Composition and attendance of Management Committee meetings
Name of Board member
Date appointed No. of meetings attended
VJack(chairperson) Re-appointedforasecondtermon1March2011Termendedon28February2015
4of4
TCoetzer Re-appointedforasecondtermon1March2015 1of1
BColyvas Re-appointedforasecondtermon1March2011 5of5
CJKujenga Re-appointedforasecondtermon1March2011Termendedon28February2015
1of4
RRasikhinya Re-appointedforasecondtermon1March2011 5of5
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Remuneration of Board members
Name of Board member
Board fee Manage-ment committee fee
Project and ad hoc fee
Chair-person fee
Total2015
Total2014
Paidtomembers
TCoetzer 92892 5090 8907 8734 115624 9438
BColyvas 92892 25450 12725 131068 43472
Paidtoemployer
VJack 71807 17408 14507 109525 213247 173029
CKujenga 62499 11393 73891 39451
NRanchod 68906 18133 87039 41081
Total 388997 59341 54272 118259 620869 306471
Internal control and risk management
TheBoard,withtheassistanceoftheinternalauditandtheauditandriskcommittee,needstoensurethataneffective,efficientandtransparentsystemofinternalcontrolisimplementedandmaintainedsothattheASBcanmeetitsstrategicobjectivesandgoals.Thisisdonethroughtheestablishmentofanappropriatecontrolenvironment.DuetothesizeandthenatureoftheASB’soperations,acompletesystemofinternalcontrolandriskmanagementisnotfeasible.The CEO is responsible for supervising the day-to-day operations of the ASB while the Management Committee monitorscompliancewithapplicablelawsandregulationsagainsttheASB’sapprovedoperatingandpolicyprocedurestoensurethatgoalsandobjectiveareachieved.
Relianceisalsoplacedontheinternalandexternalaudit,asthesefunctionsplayanimportantroleinprovidingassurancethattheeffectiveinternalcontrolsystemsaremaintained.
TheBoardhasensuredthatthenecessarypolicies,proceduresandpracticesareinplacetoidentifyandrespondtoallrisksfacedbytheASBinatimelyandadequatemanner.ThisincludesanannualassessmentofrisksassociatedwiththefunctionsandoperationsoftheASB,andfrequentlyupdatingitsriskmanagementstrategyinresponsetotheserisks.
Internal audit
InternalauditprovidesassurancethattheBoardmaintainsaneffectiveandefficientinternalcontrolenvironment.InternalauditisresponsibleforevaluatingtheASB’scontrolsindeterminingitseffectiveness,efficiencyandeconomy.Internalauditisalsoresponsibleforimprovingandenhancingexistingcontroland,whereappropriate,developingnewrecommendations.Aswiththeauditandriskcommittee,theASBsharesitsinternalauditfunctionwiththeNationalTreasury.Duringtheperiodunderreview,theinternalauditconductedvariousreviewsandassessmentsoftheASB’scontrolenvironment.Theresultsweredirectlyreportedtotheauditandriskcommittee.Nosignificantdeviationsfrominternalauditwerereportedduringtheseassessments.
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External audit
NexiaSAB&TwereappointedasexternalauditorsoftheASB.Nonon-auditserviceswereprovidedbytheexternalauditors.Theirreportissetoutonpages35to37.
Compliance with laws and regulations
TheASBhasestablishedandimplementedvariouspoliciestoconsidercompliancewiththeapplicablelawsandregulationsonaregularbasis.
Fraud and corruption
TheBoardhasdevelopedandimplementedafraudpreventionplantoaddresstheriskoffraudandcorruption.Duringtheyearunderreview,theinternalaudithasconductedafollow-upauditontheassessmentoftheASB’sfraudpreventionstrategyandfoundthattheASBhassufficientlyimplementeditsrecommendations.
Minimising conflict of interest
Inordertominimiseconflictsofinterest,theBoardhasdevelopedandimplementedappropriateprocedurestodealwiththismatter.AllBoardmembersandtheSecretariatarerequiredtocompleteanannualdeclarationofinterests.
AteachBoardmeeting,thedeclarationsofBoardmembersareupdated.Newlyappointedemployeesarerequiredtodeclareallactualorperceivedconflictsof interestonappointment.Whennewconflictsof interestarise,employeesarerequired todeclaresuchinterestintheappropriateregister,afterwhichitisreportedtotheBoard.
Code of conduct
TheBoardhasapprovedandimplementedacodeofconductthatrequiresallBoardmembersandtheSecretariattoconductitsoperationsfairly,impartially,inanethicalandpropermanner,andinfullcompliancewithallknownandapplicablelawsandregulations.TheASBexpectsallemployeestoshareitscommitmenttohighmoral,ethicalandlegalStandards.AnyviolationsoftheCodearereportedtotheCEO,thechairpersonoftheBoardandtointernalauditandexternalaudit,whereapplicable.
Health, safety and environmental issues
TheBoardhasapprovedanoccupationalhealthandsafetypolicyaimedatprovidingandmaintainingasafeandhealthyworkingenvironmentforallitsemployees.Thispolicyisregularlyreviewed.
DuringtheperiodunderreviewnobreakdownsintheASB’spolicyconcerninghealth,safetyandotherenvironmentalissueswerenoted.
Social responsibility
As theASB is financed indirectlyby taxes, througha transferpayment from theNationalTreasury, itspolicy is tomakenodonationsorcontributionsforsocialresponsibility.Employeesmayfromtimetotimemakevoluntarycontributionsintheirpersonalcapacity.
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Human resource management and developmentIntroductionTheemploymentofdedicatedandcompetentemployeesisfundamentaltotheASBmeetingitsgoalsandobjectives.TheASBiscommittedtoemploy,train,utiliseandretainthebestpersonnelavailable,andtomakediligenteffortstodevelopandmotivateallemployees towardshigherStandardsofperformance.TheASBprovidesemployeeswithopportunities toattain their fullpotentialandtoserveatthehighestlevelofresponsibilityconsistentwiththeirowninterestsandabilities.
TheemploymentofpersonnelistheoperationalresponsibilityoftheCEO.TherecruitmentofprofessionalqualifiedemployeesistheresponsibilityoftheManagementCommittee.TheBoardhasdevelopedandimplementedvariouspoliciesrelatingtotheappointment,evaluationanddevelopmentofprofessionalemployeesaimedatprotectingandadvancingallemployees.Policy development and challenges faced by the ASB
TheBoard,throughtheManagementCommittee,regularlyreviewsexistingpoliciesandproceduresinaddressingallhumanresourcerelatedmattersandanychallengesfacedbytheASB.OneofthebiggestchallengesremainstherecruitmentandretentionofskilledtechnicalemployeesinordertomeettheASB’sobjectivesassetoutinitsstrategicplan.
Theprofessional employees comprisequalified charteredaccountantswho specialise in technicalaccounting researchanddevelopment.Potentialcandidatesarescarce.
Asanalternate toemployingstaff, theASBcontractssomeof theStandards-developmentwork toexternalserviceproviderswhentherearevacanciesamongstprofessionalstaff.Thisisnotcosteffective,astheserviceproviderworksonasingleproject,whileemployeesareexpectedtoworkconcurrentlyonaminimumofthreeprojectsandmaintainaworkingknowledgeofanyprojectcurrentlyontheASBworkprogramme.Itissometimesnecessarytodothis,however,toenabletheASBtoachieveitsstrategicobjectives.
Recruitmentincludesheadhuntingtechnicalemployeesfromaccountingfirms,advertisementsinnationalnewspapersandtheuseofemploymentagencies.
Employment equity
TheASBsupportsemploymentequity in theworkplace.Thedemographiccompositionof theASBat reportingdatewasasfollows.
African Coloured Indian White
Board:
Female 2 0 1 1
Male 1 0 3 2
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Secretariat – operational employees:
Female 1 0 0 3
Male 0 0 1 1
Secretariat – support employees:
Female 0 2 0 2
Male 0 0 0 0
Total:
Female 3 2 1 4
Male 1 0 4 2
Grandtotal 4 2 5 6
Human resource oversight statistics
Remuneration of employees
TheASBremuneratesemployeesatmarket-relatedlevels,benchmarkedagainstapplicableremunerationpoliciesinthemarket.AllthepositionsintheASBhavebeengradedusingthePattersonscaleofgradingasthisgradingscaleissufficientlyflexibletodeterminepayscalesforeachemployee.RemunerationisbasedontotalcosttotheASB,whichincludescontributionstomedicalaids,providentfundsandretirementannuityfunds.Salaryincreasesaredeterminedbyworkperformance,growthinthejobprofileandanannualcostoflivingadjustment.
Personnel cost by salary band
Level Personnel Expenditure
(R’000)
% of personnel exp. to total
personnel cost (R’000)
No. of employees Average personnel cost per employee
(R’000)
TopManagement 2274 29.7% 1 2274
Professionalqualified 4788 62.6% 4 1197
Skilled 588 7.7% 2 294
TOTAL 7650 100% 7
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Performance Rewards
TheASBacknowledgestheneedforaneffectiveincentiveschemeandpolicythatallowsfortherecognitionandrewardofbothorganisationalandindividualperformance.Thisispartofthedevelopmentandimplementationofaperformancemanagementprocesswithin theASB. TheManagementCommitteehas therefore implementedan incentiveschemeofwhichavariablecomponentisallocatedbasedon40%infavouroforganisationalperformanceand60%infavourofindividualperformance.Incentivestoamaximumof30%ofguaranteedremunerationarepaid,atthediscretionoftheManagementCommittee.
The Chairperson evaluates the Chief Executive’s performance and the Management Committee oversees the performancereviewsandremunerationoftheSecretariat.
Performance rewards Personnel Expenditure (R’000)
% of performance rewards to total personnel cost
(R’000)TopManagement 372 2274 4.9%Professionalqualified 776 4788 10.1%Skilled 97 588 1.3%TOTAL 1245 7650
Employment and vacancies
2013/2014 No. of Employees
2014/2015 Approved Posts
2014/2015No. of Employees
2014/2015 Vacancies
% of vacancies
TopManagement 1 1 1 0 0%Professionalqualified
4 4 4 0 0%
Skilled 2 2 2 0 0%TOTAL 7 7 7 0 0%
Development of employees
TheASBiscommittedtodeliveringqualityservicesthroughitsemployees.Itthusensuresthatallemployeesreceiveup-to-date,relevantandeffectivetraininganddevelopmentsothattheASBcanfulfilitsmissionandvision.VariouspoliciesandproceduresconcerningthetraininganddevelopmentofemployeeshavethereforebeendevelopedandapprovedbytheBoard.Thesepoliciesandproceduresareaimedatensuringthatemployeesareprovidedwiththenecessaryknowledgeandskillstodevelopatbothapersonalandcareerlevel.
Personnel Expenditure (R’000)
Training Expenditure(R’000)
Training Expenditure as a % of Personnel
Cost.
No. of employees trained
Average training cost per employee
7650 233 3% 7 33.3%
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Report of the Audit and Risk CommitteeWearepleasedtopresentourreportforthefinancialyearended31March2015.
Audit and Risk Committee Responsibility
TheCommitteeoverseestheeffectivenessoftheASBsfinancialreporting,internalcontrolandriskmanagement.Italsooverseestherelationshipoftheexternalauditor,monitorstheintegrityofthefinancialstatementsandtheeffectivenessoftheinternalauditfunction.
TheCommitteeisregulatedbyitsapprovedtermsofreferenceandauditandriskcommitteecharter,andhasdischargeditsresponsibilitiessetouttherein.TheAuditandRiskCommitteecompliedwithsection51(1)(a)ofthePFMAandTreasuryRegulation27.1.
Membership and meetings
InformationonattendanceofauditandriskcommitteemembersatmeetingsandremunerationareincludedintheannualreportoftheNationalTreasury.WiththeappointmentofthenewBoard,someoftheBoardmemberswillbenominatedtofillvacanciesonthesharedNationalTreasuryauditandriskcommittee.
Role of the Audit and Risk Committee
• EffectivenessofInternalControl TheAuditandRiskCommitteehas,amongothers,reviewedthefollowing:
* theeffectivenessoftheinternalcontrolsystems;* thereportsissuedbyinternalandexternalauditandtheresponseofmanagementtospecificrecommendations;* theriskareasoftheentity’soperationscoveredinthescopeofinternalandexternalaudits;* theadequacy,reliabilityandaccuracyoffinancialinformationprovidedtomanagementandusersofsuch
information;* accountingandauditingconcernsidentifiedasaresultofinternalandexternalaudits;* compliancewithlegalandregulatoryprovisions;and* theindependenceandobjectivityofbothinternalandexternalauditors.
TheAuditandRiskCommitteeisoftheopinion,basedontheinformationandexplanationsgivenbymanagement,theinternalauditor,anddiscussionswiththeindependentexternalauditorontheresultofitsaudit,thatthesystemofinternalcontrolfortheperiodunderreviewwasefficientandeffective.
• InternalAuditTheAuditandRiskCommitteeconsiderstheinternalauditfunctiontobefunctioningeffectivelyandhasaddressedtheriskspertinenttotheASBinitsaudit.Duringtheyeartheinternalauditfunctionperformedthefollowingactivities:
* Reviewofauditreadiness.* Auditofperformanceinformation
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Opinion
Inouropinion,theannualfinancialstatementspresentfairly,inallmaterialrespects, thefinancialpositionoftheAccountingStandardsBoardasat31March2015anditsfinancialperformanceandcashflowsfortheyearthenended,inaccordancewith theSouthAfricanStandardsofGenerally RecognisedAccounting Practiceand the requirements of the Public FinanceManagementActofSouthAfrica.
REPORTONOTHERLEGALANDREGULATORYREQUIREMENTS
InaccordancewiththePublicAuditActofSouthAfrica,2004(ActNo.25of2004)andthegeneralnoticeissuedintermsthereof,wehavearesponsibilitytoreportfindingsonthereportedperformanceinformationagainstpredeterminedobjectivesforselectedobjectivespresentedintheannualperformancereport,non-compliancewithlegislationandinternalcontrol.Weperformed tests to identify reportable findings as described under each subheading but not to gather evidence to expressassuranceonthesematters.Accordingly,wedonotexpressanopinionorconclusiononthesematters.
Predetermined Objectives
Weperformedprocedurestoobtainevidenceabouttheusefulnessandreliabilityofthereportedperformanceinformationforthefollowingselectedobjectivespresentedintheannualperformancereportoftheentityfortheyearended31March2015:
• Objective1:Influencedevelopmentofinternationalstandardsonpages8to9• Objective2:SetStandardsofGRAPonpages9to10• Objective3:FacilitatetheimplementationoftheStandardsofGRAPonpage10• Objective4:MonitortheapplicationoftheStandardsofGRAPonpages11• Objective5:ManagingtheASBasanentityonpages12
Weevaluated the reportedperformance informationagainst theoverallcriteriaofusefulnessandreliability. WeevaluatedtheusefulnessofthereportedperformanceinformationtodeterminewhetheritwaspresentedinaccordancewiththeNationalTreasury’sannualreportingprinciplesandwhetherthereportedperformancewasconsistentwiththeplannedobjectives.Wefurtherperformed tests todeterminewhether indicatorsand targetswerewelldefined,verifiable, specific,measurable, timeboundandrelevant,asrequiredbytheNationalTreasury’sFramework for managing programme performance information (FMPPI).Weassessedthereliabilityofthereportedperformanceinformationtodeterminewhetheritwasvalid,accurateandcomplete.
Wedid not identify anymaterial findings on the usefulness and reliability of the reported performance information for thefollowingobjectives:
• Objective1:Influencedevelopmentofinternationalstandards• Objective2:SetStandardsofGRAP• Objective3:FacilitatetheimplementaionoftheStandardsofGRAP• Objective4:MonitortheapplicationoftheStandardsofGRAP• Objective5:ManagingtheASBasanentity.
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Annual Financial StatementsSTATEMENTOFFINANCIALPOSITIONASAT31MARCH2015
FiguresinRand Note 2015 2014
AssetsNon-currentassetsProperty,plantandequipment 5 197 878 282 140
CurrentassetsReceivablesfromexchangetransactions 6 89 876 98 334Cashandcashequivalents 7 907 998 2 736 405
997 874 2 834 739Totalassets 1 195 752 3 116 879
NetassetsandliabilitiesLiabilitiesCurrentliabilitiesUnusedfundstobesurrenderedtotheNationalRevenueFund 8 - 1 249 514Employeebenefitprovisions 9 319 051 250 059Payablesfromexchangetransactions 10 678 823 1 259 326Netassets 997 874 2 758 899Accumulatedsurplus 11 197 878 357 980Totalnetassetsandliabilities 1 195 752 3 116 879
STATEMENTOFFINANCIALPERFORMANCEFORTHEYEARENDED31MARCH2015
RevenueNon-exchangerevenueTransfer 1 11 499 514 9 951 123ExchangerevenueInterest 182 507 117 569Profitondisposalofassets 5 - 3 000Otherincome 150 300 98 761
332 807 219 33011 832 321 10 170 453
ExpenditureDepreciationandimpairment 5 (84 262) (65 578)Employeebenefits 2 (7 650 460) (6 674 668)Operatingexpenditure (4 257 701) (3 278 857)
(11 992 423) (10 019 103)(Deficit)/surplusfortheyear (160 102) 151 350
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STATEMENTOFCHANGESINNETASSTESFORTHEYEARENDED31MARCH2015
FiguresinRand Note Accumulatedsurplus
Totalnetassets
Balanceat01April2013 206 630 206 630
Surplusfortheyear 151 350 151 350
Balanceat01April2014 357 980 357 980
Deficitfortheyear (160 102) (160 102)
Balanceat31March2015 11 197 878 197 878
CASHFLOWSTATEMENTFORTHEYEARENDED31MARCH2015
FiguresinRand Note 2015 2014
Cashflowfromoperatingactivities
Cashreceipts
Transfer 10 250 000 10 061 000
Other 150 300 98 76110 400 300 10 159 761
Cashpaid
Employees (8 577 454) (5 689 472)
Suppliersandother (3 833 761) (3 532 312)(12 411 215) (9 221 784)
Netcashfromoperatingactivities 12 (2 010 915) 937 977
Cashflowsfrominvestingactivities
Purchaseofproperty,plantandequipment 5 - (141 087)
Proceedsfromsaleofproperty,plantandequipment 5 - 3 000
Interestincome 182 507 117 569
Netcashfrominvestingactivities 182 507 (20 518)
Totalcashmovementfortheyear (1 828 408) 917 459Cashatthebeginningoftheyear 2 736 405 1 818 946
Totalcashatendoftheyear 7 907 997 2 736 405
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STATEMENTOFCOMPARISONOFBUDGETANDACTUALAMOUNTSFORTHEYEARENDED31MARCH2015
Note Actual Budget Variance
Revenue
Transfer 17a 11 499 514 10 250 000 1 249 514
Interest 182 507 70 000 112 507
Otherincome 150 300 80 000 70 30011 832 321 10 400 000 1 432 321
Less:operatingexpenditure 11 908 161 10 400 000 1 508 161Employeebenefits 7 650 460 7 724 686 (74 226)
Boardremuneration 628 360 667 203 (38 843)
Domestictravel 161 796 203 326 (41 530)
Foreigntravel 557 071 484 629 72 442
Trainingandrefreshments 241 870 92 419 149 451
Communicationandmarketing 17b 1 134 226 160 471 973 755
Printingandpublications 114 211 117 133 (2 922)
Administration 17c 1 420 167 950 133 470 034(Deficit)/Surplusfortheyearbeforedepreciationandimpairment
(75 840) - (75 840)
Add:Depreciationandimpairment 17d (84 262) (85 817) (1 555)
(Deficit)/Surplusfortheyear (160 102) (85 817) (77 395)
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STATEMENTOFACCOUNTINGPOLICIES
General information
TheAccountingStandardsBoardisajuristicpersonestablishedinaccordancewiththePublicFinanceManagementAct,ActNo1of1999,asamended(PFMA).TheprincipalactivityoftheASBisthesettingofStandardsofGenerallyRecognisedAccountingPractice(GRAP).
Basis of preparation
Theannual financialstatementshavebeenprepared inaccordancewithStandardsofGRAP.Theyarepresented inSouthAfricanRand,whichisthefunctionalcurrencyoftheRepublicofSouthAfrica.
Thehistoricalcost conventionhasbeenused,exceptwhereotherwise indicated. Managementhasusedassessmentsandestimates in preparing the annual financial statements. These are based on the best information available at the time ofpreparation.Thefinancialstatementshavebeenpreparedonagoingconcernbasis.
Adoption of new and revised Standards
Standards in issue but not effective
ThefollowingStandardsofGRAPthathavebeenissued,butarenotyeteffective,arenotlikelytoaffecttheannualfinancialstatementswhentheyareadoptedastheseStandardshavebeenusedtoformulateandinformthecurrentaccountingpoliciesanddisclosures:
GRAP20 RelatedPartyDisclosures;andGRAP108 StatutoryReceivables.
Comparative figures
Noreclassificationofcomparativefigureshasbeenmade.
Comparison to budget
Thefinancialstatementsandthebudgetarepreparedonthesamebasisofaccounting.Comparativeinformationisnotrequiredforthisreport.
Key accounting policies
Thekeyaccountingpoliciesaresetoutbelow.ThekeyaccountingpoliciesrelatetotherevenueoftheASBandpoliciesrelatedtoemploymentcosts,themainactivitiesoftheASB.AcompletelistofaccountingpoliciesisavailableontheASBwebsiteonwww.asb.co.za.
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Employee benefits
Shorttermemployeebenefits
Thecostofshorttermemployeebenefitsisrecognisedintheperiodinwhichtheserviceisrendered.
Provisionforemployeebenefits
Provision foremployeeentitlement toannual leave represents thepresentobligation that theASBhas topayasa resultofemployees’servicesprovidedtothereportingdate.Theprovisionhasbeencalculatedatundiscountedamountsbasedonsalaryrateseffectiveatthereportingdate.
Postretirementemployeebenefits
TheASBoperatesadefinedcontributionplanforitsemployeesandisnotliableforanyactuariallosssustainedbythefund.Accordingly,noprovisionhasbeenmadeforanysuchlossesandcontributionspaidareexpensed.
Transfer from the National Treasury
ThetransferfromtheNationalTreasuryisrecognisedwhenitisprobablethatfutureeconomicbenefitswillflowtotheASBandwhentheamountcanbereliablymeasured.Revenueisrecognisedtotheextentthatthereisnofurtherobligationarisingfromthereceiptofthetransferpayment.
Services received in kind
TheASBreceivesservicesinkindfromtheNationalTreasureforthesharedinternalauditfunctionandremunerationpaidtothemembersoftheAuditandRiskCommittee.ItalsoreceivesservicesinkindfrommembersofprojectgroupswhoarenotremuneratedbytheASBfortheircontributionstostandard-setting.TheASBcannotreliablydetermineafairvaluefortheservicesitreceivedinkind.AccordinglynoamountisrecognisedintheStatementofFinancialPerformanceforthevalueoftheseservicesreceived.
Critical accounting judgements
Aspectswherejudgementhasbeenexercisedthatmayhaveasignificantriskofcausingamaterialadjustmenttothecarryingvalueofassetsandliabilitieswithinthenextfinancialperiodarediscussedbelow.
Determinationofusefullivesforproperty,plantandequipment
ThenatureoftheASB’soperationsresultsindifficultiesindeterminingtheusefullivesofitemsofproperty,plantandequipment.Theassetlivesexceedindustrynormsforsimilarassets.Inre-assessingusefullives,thedepreciationchargeintheStatementofPerformanceisadjusted.
Adequacyoftheleavepayprovision
Theleavepayprovisionisbasedonactualdaysaccruedattherateofremunerationatthereportingdate.Changesintherateofremunerationaredeterminedannuallyandareeffectivefromthefirstdateofthefinancialyear.Theprovisionisonlyneededwhenstaffresign,asunusedleaveisforfeitedayearaftertheyearinwhichitaccrued.
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NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31MARCH2015
2015 2014
1.Transfers
Operatingexpenses 11 992 423 10 019 103
Depreciationandimpairment (84 262) (66 578)
Purchaseofproperty,plantandequipment - 141 087
Proceedsondisposalofproperty,plantandequipment - (3 000)
Straightliningoflease (75 840) 75 840
Interestincome (182 507) (117 569)
Otherincome (150 300) (98 761)
Amountutilisedduringtheyear 11 499 514 9 951 123
2.Employeebenefitcosts
Basicsalaries–permanentstaff 7 639 348 6 663 643
ContributiontotheUIF 11 112 11 0257 650 460 6 674 668
3.Operatingexpenseshasbeenarrivedataftercharging
Auditors’remuneration-Fees 98 872 93 257Depreciation 84 262 65 578Legaladvice 118 238 20 000Feespaidtoconsultantsforstandard-settingresearch 175 000 450 000Feespaidtoconsultantsforhumanresourceservices 8 835 133 722
4.Taxation
TheASBisexemptfromincometaxasmorethan80%ofitsexpenditureisdefrayedfromfundsvotedbyParliament.TheASBisexemptfromthepaymentofValueAddedTax(VAT)onthetransferreceived.Asaresult,anyVATpaidbytheASBisalsonotrefundablebySARS.
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5.Property,plantandequipment
2015 2014
Cost Accumulateddepreciation
Carryingvalue Cost Accumulateddepreciation
Carryingvalue
Furnitureandfittings
390 618 (269 140) 121 478 393 981 (239 983) 153 998
Officeequipment
226 991 (150 591) 76 400 238 203 (110 061) 128 142
Total 617 609 (419 731) 197 878 632 184 (350 044) 282 140
Reconciliation of property, plant and equipment
Furnitureandfittings Officeequipment Total
Balance1April2013 137 107 69 523 206 630
Additions 45 625 95 462 141 087
Disposalsatcost - (124 577) (124 577)
Depreciationondisposals - 124 578 124 578
Depreciationandimpairment (28 734) (36 844) (65 578)
Balance1April2014 153 998 128 142 282 140
Additions - - -
Disposalsatcost (3 363) (11 212) (14575)
Depreciationondisposals 3 365 11 210 14 575
Depreciationandimpairment (32 522) (51 740) (84 262)
Balance1April2015 121 478 76 400 197 878
2015 2014
Proceedsondisposal - 3 000
Costoffullydepreciatedassetsstillinuse - 47 148
6.Receivablesfromexchangetransactions
Financialassetsatamortisedcost
Prepayments 34 669 36 400
Deposits 55 207 61 93489 876 98 334
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Refertonote14onfinancialinstrumentsonhowriskismanagedinrelationtothefinancialassetslistedabove.
2015 2014
7.Cashandcashequivalents
Cashandcashequivalentsconsistofthefollowing:
Financialassets
Cashonhand 213 384
Cashatbank 74 637 998 859
Depositsheldininvestmentaccounts 833 147 1 737 162907 997 2 736 405
Refertonote14onfinancialinstrumentsonhowriskismanagedinrelationtothefinancialassetslistedabove.
8.UnusedfundstobesurrenderedtotheNationalRevenueFund
Openingbalance (1 249 514) (1 139 637)
Transferpaymentreceived (10 250 000) (10 061 000)
Transferpaymentutilisedduringtheyear 11 499 514 9 951 123
Closingbalance 0 (1 249 514)
Inaccordancewithsection53(3)ofthePFMAtheunusedtransferpaymentcannotberetainedwithoutpriorwrittenapprovalfromtheNationalTreasury.
9.Employeebenefitprovision
Openingbalance 250 059 257 901
Increaseinprovision 549 671 485 921
Changeinestimate 22 301 18 815
Leavepaidout - (16 848)
Amountsutilisedduringtheyear (502 980) (495 730)
Closingbalance 319 051 250 059
IntermsoftheASB’sleavepaypolicy,employeesareentitledtoaccumulatedvestedleavepaybenefitsnottakenwithinaleavecycle,providedthatanyleavepaybenefitsnottakenwithinaperiodofoneyearaftertheendofaleavecycleareforfeited.
10.Payablesfromexchangetransactions
Payablesatamortisedcost 83 216 51 962
Accrualsforgoodsandservices 590 177 130 108
Payrollrelatedaccruals 5 430 1 001 416678 823 1 183 486
Straight-liningofoperatingleases - 75 840678 823 1 259 326
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2015 2014
11.Accumulatedsurplus
Openingbalance 357 980 206 630
(Deficit)/surplusfortheyear (160 102) 151 350
Closingbalance 197 878 357 980
Madeupasfollows:
Netbookvalueofnon-currentassets 197 878 282 140
Straight-liningofoperatingleases - 75 840197 878 357 980
12.Netcashfromoperatingactivities
(Deficit)/surplusfortheyear (160 102) 151 350
Adjustmentsfor:
Depreciationandimpairment 84 262 65 578
Increase/(Decrease)inprovisions 68 992 (7 842)
Interestincome (182 507) (117 569)
Profitondisposalofproperty,plantandequipment - (3 000)
Changesinworkingcapital:
Receivablesfromexchangetransactions 8 457 226
Payablesfromexchangetransactions (580 503) 739 357
UnusedfundstobesurrenderedtotheNationalRevenueFund (1 249 514) 109 877
(2 010 915) 937 977
13.Financialinstruments
Financialassets
Cashandcashequivalents 907 997 2 736 405
Financialliabilities
Payablesfromexchangetransactions 678 823 1 183 486
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14.FinancialriskmanagementCreditrisk
ReceivablesfromexchangetransactionsThereceivablesareexposedtoalowcreditriskandnoamountsareoverdue.CashandcashequivalentsCashanddepositsareheldwithanAAratedregisteredbankinginstitutionandareregardedashavinginsignificantcreditrisk.ThebalanceisheldattheCentralPublicDepository(CPD),whichhasthesameratingastheSouthAfricanReserveBank.Cashininvestmentaccountsarekeptatamaximuminordertomaximiseinterestearned.TheASBhasinvestedanycashneededinapproximatelyamonthinashorttermmoneymarketaccount,andthebalanceintheCPD.Theinterestratesontheseaccountsfluctuateinlinewithmovementsincurrentmoneymarketrates.RatesearnedonfundsdepositedwiththeCPDarehigherthanthoseearnedonfundsintheshort-termmoneymarketaccount.
LiquidityriskPayables from exchange transactionsTheBoardisonlyexposedtoliquidityriskwithregardtothepaymentofitspayables.Thesepayablesareallduewithintheshort-term.TheASBmanagesitsliquidityriskbyholdingsufficientcashinitsbankaccount,supplementedbycashavailableininvestmentaccounts.
InterestrateriskReceivables from exchange transactions
Thereceivablesareexposedtoaninsignificantamountofinterestraterisk.
15.RelatedParties 2015 2014
Compensationtokeymanagement–ChiefExecutiveOfficer’sremuneration
Salary 1 900 000 1 765 000
Performancebonus 371 868 332 808
UIFcontributions 1 785 1 785
2 273 653 2 099 593
TheBoardappointedtheChiefExecutiveOfficer,MsESwart,on1March2003.HerperformancebonusisdeterminedafteranannualperformanceevaluationofbothherperformanceandthatoftheASBasawhole.
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Chairperson’sfee 2015 2014
Fee 118 259 113 039
Boardmeetings 71 807 41 081
ManagementCommitteemeetings 17 408 11 085
Projectgroupmeetings - 7 824
Other 14 507 -
221 981 173 029
OtherBoardmembers’fees
Boardmeetings 317 189 117 529
ManagementCommitteemeetings 41 933 15 913
Projectgroupmeetings 3 627 -
Other 36 139 -
398 888 133 442
620 869 306 471
ThoseBoardmembersemployedbynationalorprovincialgovernmentorotherorgansofstatearenotremunerated.
Averagenumberofmembers
Board 10 9
ManagementCommittee 4 4
Averagenumberofemployees
Secretariat 7 6
TheNationalTreasuryactsonbehalfoftheMinisterofFinanceasExecutiveAuthorityandhastheresponsibilitytomakeprovisionforfundingtheactivitiesoftheASBbywayofagrantlistedintheEstimatesofNationalExpenditure(seenote6).TheASBalsoreceivesAuditandRiskCommitteeandinternalauditservicesthatarepaidforbytheNationalTreasury.
ByvirtueofthefactthattheASBisanationalpublicentityandcontrolledbythenationalgovernment,anyothercontrolledentityofthenationalgovernmentisarelatedparty.Alltransactionswithsuchentitiesareatarm’slengthandonnormalcommercialterms,exceptwhereemployeesofnationaldepartmentsornationalpublicentitiesparticipateintheASB’sprocessesanddonotreceiveanyremuneration.
TheASBdoesnotfullycompensateBoardorManagementCommitteeforthepreparationrequiredformeetings.Projectgroupmembersarealsonotremuneratedforeitherattendanceorpreparationtime.
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16.Commitments Atthereportingdate,theASBhadcommitmentsoutstandingunderanoncancellableoperatinglease,whichfalldueasfollows:
Officebuildingandparking 2015 2014
Duewithinoneyear 583 311 543 098
Duewithin2-5years 2 333 242 -
2 916 553 543 098
TheASBenteredintoafiveyearleaseagreement,whichcommencedon1April2010andterminatedon31March2015.TheASBhasrenewedtheleaseforanother5yeartermandwithnoincreaseintherentalinthefirstyearandanescalationofrentalof5.5%perannumthereafter.Thecostoftheleaseisstraightlinedovertheperiodofthelease.
17.Budgetvariances
ThebudgetwasapprovedbytheBoardandsubmittedtotheexecutiveauthorityintermsofsection53(1)ofthePFMA.
Inaccordancewiththerevenuerecognitionpolicy,thetransferpaymentreceivedisreducedbytheamountnotusedandthatamounthastobesurrenderedtotheNationalRevenueFund.
Explanationsforothersignificantvariancesare:
a.Consenttoretaintheprioryearsurplus,resultedintheincreaseinrevenue.b.InaccordancewiththerequirementsoftheUseofOfficialLanguagesAct,StandardsofGRAParebeingtranslatedinto isiZulu,SesothoandAfrikaanswithaninitialexpenseofR864255.InthecurrentyearwetranslatedalltheStandardsthat havebeenissuedtodate.InfutureonlychangestoStandardsornewstandardswillneedtobetranslated.c. InaccordancewiththeTreasuryRegulations,anumberofcontractsenteredintobytheASBweresubmittedforreviewby thelegaladvisorresultinginanexpenseofR124763.ConsultantswerecontractedtoperformresearchfortheASBto thevalueofR175000.ThecostofrecruitmenttofillavacancywithintheASBcostR164160.Thesurplusfromtheprior yearwasretainedwithapprovaloftheNationalTreasurytofundtheseexpenses.d.Thenetdeficitisanoncashdeficitattributabletodepreciationandchangesintheprovisionforleavepay.
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