Results of the Review of Directive 12 on The Selection of an Appropriate Reporting Framework for Public Entities

The ASB reviewed the adoption and application of Directive 12. The full results of the review are published in a Review Report.

Adoption of the Directive

With the withdrawal of Statements of GAAP, schedule 2, 3B and 3D public entities were required to apply the criteria in Directive 12 and assess whether they should apply IFRS Standards of Standards of GRAP.

From the review, it was unclear whether all entities meant to apply the Directive did so. This is  partly because entities may not have made clear statements indicating its adoption in the financial statements. Twenty-six entities changed their reporting framework, with nineteen changing to Standards of GRAP.

The Directive requires entities to review their reporting framework when the nature of their operations changes. While frequent changes in entities’ reporting framework are not anticipated, entities should be aware of changes in the nature of their operations and the potential effect on their reporting framework.

Application of the Directive

The key application issue in the Directive is the application of the criteria to assess whether Standards of GRAP or IFRS Standards should be applied.

Stakeholders were generally supportive of the criteria. Some were of the view that the criteria to apply IFRS Standards should include publicly traded debt. As the JSE listing requirements do not require IFRS Standards to be applied for debt listings, there is no specific reason to include publicly traded debt in the criteria.

A few application issues related to the criteria were identified. These issues did not require amendments to the Standards. These and other issues will be addressed in a Fact Sheet prepared by the Secretariat.