scholarly journals A critical analysis of the meaning of the term ‘value’ in Section 30(6)(e) of the Companies Act

2018 ◽  
Vol 21 (1) ◽  
Author(s):  
Mareli Dippenaar
Keyword(s):  
South African ◽  
Financial Reporting ◽  
Intrinsic Value ◽  
Historical Analysis ◽  
Fair Value ◽  
Research Approach ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Intended Meaning ◽  
African Context

Background: Sections 30(4) and 30(5) of the Companies Act 71 of 2008 (the Act) require, inter alia, disclosure of the remuneration received by each director in a company’s annual financial statements. Section 30(6) defines the term ‘remuneration’, which includes, inter alia, in Section 30(6)(e) the ‘value’ of any option or right granted to a director, as contemplated in Section 42, which deals with options for the allotment or subscription of securities or shares of a company. It is uncertain what the intended meaning of the term ‘value’ is in this context and it is interpreted differently by different companies in practice. Aim: The objective of this study was to understand the meaning of the term ‘value’ in Section 30(6)(e) of the Act (including the date of measurement thereof), as intended by the legislature. Setting: This article examined existing literature in a South African corporate and legislative environment. Method: A non-empirical study of existing literature was conducted by performing a historical analysis within a South African context. A doctrinal research approach was followed. Results: Possible interpretations of the term ‘value’ include the grant date fair value of the rights, the fair value at reporting date, the fair value on vesting date, the expense calculated in terms of the International Financial Reporting Standard on share-based payments, the gain on exercise of the rights and the intrinsic value on reporting date. It is submitted that the most likely meaning is the grant date fair value. Conclusion: It was found that the meaning of the term ‘value’, for purposes of Section 30(6)(e) of the Act, is unclear and interpreted differently by different companies. It is, therefore, recommended that the wording of Section 30(6)(e) is amended to reflect the meaning intended by the legislature.

scholarly journals The Value Relevance of Aged Goodwill: A South African Study

2019 ◽  
Vol 23 ◽  
Author(s):  
Fatima Zahra Omarjee ◽  
Yaeesh Yasseen ◽  
Waheeda Mohamed
Keyword(s):  
South African ◽  
Financial Reporting ◽  
Value Relevance ◽  
Accounting Standards ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Accounting Practice ◽  
African Context ◽  
Subsequent Measurement ◽  
Is Value

The purpose of this study was to determine whether goodwill, which is measured in accordance with International Financial Reporting Standard 3 (IFRS 3), is value relevant at acquisition and as time progresses, for a period of two years after acquisition. Using the Ohlson model, 126 JSE firm-year observations were tested. It was subsequently found that goodwill was not value relevant at acquisition date but did become value relevant as time progressed. The possible reasons for goodwill not being value relevant at acquisition are attributed to the manner in which IFRS 3 requires goodwill to be measured, the allowance of provisional values under IFRS 3, and the complexities associated with complying with IFRS 3. Goodwill being value relevant as time progresses is attributed to the subsequent measurement requirements of IFRS 3, in particular the annual impairment testing requirement as opposed to the previous amortisation requirements. This study was conducted in a South African context where limited studies on goodwill have taken place. The results are deemed to be useful to investors and standard setters as they hold implications for goodwill accounting practice and changes to goodwill accounting standards.

scholarly journals A critical analysis of the meaning of the term ‘income’ in Sections 7(2) to 7(8) of the Income Tax Act No. 58 of 1962

2017 ◽  
Vol 20 (1) ◽  
Author(s):  
Danielle Van Wyk ◽  
Mareli Dippenaar
Keyword(s):  
South African ◽  
Income Tax ◽  
Historical Analysis ◽  
Tax Avoidance ◽  
Research Approach ◽  
Intended Meaning ◽  
Taxable Income ◽  
African Context ◽  
Actual Meaning ◽  
Gross Income

Background: Section 7 of the Income Tax Act 58 of 1962 (the Act) was introduced as an anti-avoidance measure to prevent tax avoidance by means of a donation, settlement or other disposition in various types of schemes. In terms of this section, in certain circumstances, ‘income’ is deemed to be income received by or accrued to a taxpayer. Despite the fact that the term ‘income’ has been used in Section 7 from the time that it was first introduced into the Act and the fact that it is defined in section 1 of the Act, there still remains uncertainty regarding the intention of the legislature and the actual meaning of the term in terms of Section 7.Aim: The objective of the study is to understand whether the term ‘income’, as used in Sections 7(2) to 7(8) of the Act, is used in its defined sense or if it should be ascribed a different meaning.Setting: This article examines existing literature in a South African income tax environment.Method: A non-empirical study of existing literature was conducted by performing a historical analysis within a South African context. A doctrinal research approach was followed.Results: Possible interpretations determined include ‘income’ as defined in section 1 of the Act, namely ‘gross income’ (also defined) less exempt income, ‘gross income’, profits and gains or ‘taxable income’ (i.e. ‘income’ less allowable expenditure, deductions and losses) and ‘gross income’ less related deductible expenses and losses.Conclusion: It was found that the meaning of ‘income’, for purposes of Sections 7(2) to 7(8), remains an uncertainty, and it is recommended that the wording of Section 7 be amended to reflect the intended meaning thereof.

Post-implementation challenges of fair value measurement (IFRS 13): some empirical evidence

2020 ◽  
Vol 11 (4) ◽  
pp. 587-607
Author(s):  
Babajide Oyewo
Keyword(s):  
Financial Reporting ◽  
Market Price ◽  
Fair Value ◽  
Economic Benefits ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Financial Reports ◽  
Content Type ◽  
Audit Firm ◽  
Implementation Challenges

PurposeConsequent on the widespread of fair value (FV) accounting with the coming into effect of International Financial Reporting Standard (IFRS) 13, this study investigated the post-implementation challenges of FV measurement from the perspective of auditors in Nigeria.Design/methodology/approachData collection was through a structured-questionnaire administered on auditors from diverse audit firm backgrounds in terms of size, international affiliation and global presence. Statistical techniques such as cluster analysis, factor analysis and ANOVA were applied to analyse data obtained from 277 respondents.FindingsIt was observed that the severest challenge of FV measurement bothers on the paucity of information for valuation of items. The magnitude of the challenges of applying FV measurement in various industry sectors appears similar. Although audit firm attributes affect perception on the challenges, there is concurrence among auditors that manipulation of values of assets/liabilities with no market price during estimation, leveraging on non-availability of market information on assets/liabilities by managers to manipulate financial statements, inappropriateness/non-compliance of valuation methods with IFRS 13, and low level of awareness among preparers of financial reports are notable post-implementation challenges of FV measurement.Practical implicationsConsidering that the adoption of IFRS 13 impliedly places responsibilities on countries applying the standard to develop institutional structures that facilitate the valuation of items using FV measurement, it seems the establishment of such apparatus may be a sine qua non for fully realising the socio-economic benefits of applying FV accounting.Originality/valueThe study contributes to knowledge by exposing the practical challenges of FV measurement and accounting estimates typical of a developing country that has fully implemented international accounting standards. Moreover, findings from this study could be compared with the result of investigations conducted in other jurisdictions to gain a deeper and wider insight into the challenges of FV measurement with a view to proffering solutions to the post-implementation challenges of IFRS 13.

scholarly journals Dampak Implementasi International Financial Reporting Standard Pada Penyajian Other Comprehensive Income Perusahaan Perdagangan, Jasa, dan Investasi di Indonesia

2018 ◽  
Vol 5 (01) ◽  
pp. 14-25
Author(s):  
Denny Rianto ◽  
Nurmala Ahmar
Keyword(s):  
Financial Reporting ◽  
Joint Venture ◽  
Foreign Currency ◽  
Fair Value ◽  
Future Research ◽  
Defined Benefit ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Comprehensive Income ◽  
Other Comprehensive Income

ABSTRACT The purpose of this study is to analyze the presentation of other comprehensive income and its components in the trade, service and investment industries after the implementation of the International Financial Reporting Standard in Indonesia. The sample is the trade, service and investment industry sectors listed in Indonesia Stock Exchange 2012-2015. Other Comprehensive Income (OCI) shall be presented separately in the statements of income since 2013 and re-review for 2012 on the reporting of the relevant year. The components presented include asset revaluation, translation of foreign currency financial statements to reporting currency, actuarial changes in defined benefit obligations, changes in fair value in available-for-sale investments, fair value changes to current, joint and joint venture hedges. The result of the research shows that there is difference of presentation value of other comprehensive comprehensive component. Future research can examine the antecedents and consequent accounts of OCI components in public companies in Indonesia. ABSTRAK Tujuan penelitian ini adalah menganalisis penyajian other comprehensive income dan komponennya pada industri perdagangan, jasa, dan investasi pasca penerapan International Financial Reporting Standard di Indonesia. Sampel adalah sektor industri perdagangan, jasa, dan investasi yang terdaftar di Bursa Efek Indonesia tahun 2012-2015. Other Comprehensive Income (OCI) wajib disajikan secara terpisah pada laporan laba rugi sejak tahun 2013 dan saji ulang untuk tahun 2012 pada pelaporan tahun yang besangkutan. Komponen yang disajikan mencakup revaluasi aset, penjabaran laporan keuangan mata uang asing ke mata uang pelaporan, perubahan aktuarial dalam imbalan kerja manfaat pasti, perubahan nilai wajar dalam investasi yang tersedia untuk dijual, perubahan nilai wajar terhadap lindung nilai arus, asosiasi dan ventura bersama. Hasil penelitian menunjukkan terdapat perbedaan nilai penyajian komponen other comprehensive income. Riset mendatang dapat meneliti anteseden dan konsekuen akun komponen OCI pada perusahaan public di Indonesia. JEL Classification: M41, M48

scholarly journals Herclassificatie van financiële activa

2010 ◽  
Vol 84 (3) ◽  
pp. 133-142 ◽  
Author(s):  
Bert-Jan Bout ◽  
Ralph Ter Hoeven
Keyword(s):  
Financial Reporting ◽  
Fair Value ◽  
Fair Value Accounting ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Ias 39 ◽  
Mate Waarin

Onder invloed van de kredietcrisis en na politieke druk vanuit de Europese Unie heeft de IASB in oktober 2008 en binnen zeer korte tijd een amendement doorgevoerd op de International Financial Reporting Standard (IFRS) over financiële instrumenten (IAS 39). Dit amendement maakt het onder voorwaarden mogelijk om door middel van een herclassificatie van financiële activa van fair-value-accounting naar kostprijsaccounting over te gaan. In dit artikel zullen de achtergrond en de inhoud van deze veranderingen worden besproken en geëvalueerd. Tevens worden de resultaten gepresenteerd van een empirisch onderzoek onder Europese financiële instellingen naar de mate waarin van deze herclassificatiemogelijkheid gebruik is gemaakt.

scholarly journals The expected impact of the implementation of International Financial Reporting Standard (IFRS) 16 – Leases

2019 ◽  
Vol 12 (1) ◽  
Author(s):  
Milton Segal ◽  
Genevieve Naik
Keyword(s):  
South African ◽  
Financial Reporting ◽  
Balance Sheet ◽  
Current Standard ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Managerial Implications ◽  
Reporting Structure ◽  
Value Add ◽  
Economic Transaction

Orientation: The new standard on leases, International Financial Reporting Standard (IFRS) 16, will require the majority of lessees to account for lease arrangements on the face of the balance sheet. This is in contrast to the current standard and, as a result, the effects of this transition to on-balance sheet finance require analysis.Research purpose: The purpose of this article is to identify and examine the material change implications that may arise from the implementation of IFRS 16 and determine its effect on both preparers and users of the financial statements with a specific focus on lessee accounting.Motivation for the study: Leasing is a widely used economic transaction that affects the majority of corporates and individuals. There is a lack of formal academic literature surrounding the possible implications of the new accounting standard in a South African context.Research approach, design and method: The authors performed a detailed literature review as well as gathered information at a public debate held jointly by the International Accounting Standards Board (IASB) and the South African Institute of Chartered Accountants (SAICA) to investigate what the implications may be.Main findings: This article finds and concludes that there are potentially six change implications. The affected parties were identified as lenders, preparers and analysts with the banking and retail sectors requiring the most consideration.Practical/managerial implications: Care will need to be taken when new lease transactions are entered into so that the entity still adheres to potential liquidity and solvency targets as well as loan covenant obligations.Contribution/value-add: The normative and qualitative style sheds light on the effect of the imminent changes to South Africa’s financial reporting structure, making an important contribution to financial reporting knowledge, transparency and accountability.

scholarly journals Fair Revaluation of Wine as an Investment

2015 ◽  
Vol 10 (2) ◽  
pp. 190-203 ◽  
Author(s):  
Fabian Y.R.P. Bocart ◽  
Christian M. Hafner
Keyword(s):  
Financial Reporting ◽  
Quantitative Method ◽  
Fair Value ◽  
Related Issue ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Market Participants ◽  
Fair Valuation ◽  
Value Measurement ◽  
Jel Classifications

AbstractThe price of wine is a key topic among market participants interested in valuing their stock, including dealers and restaurants, and consumers who may be interested in optimizing their purchases. A closely related issue, revaluation is the need to regularly update the value of a stock. This need is especially acute in the growing industry of wine as an investment. In this case, fair-value measurement is compulsory by law. We briefly review methods available to funds and introduce a new quantitative method aimed at achieving compliance with IFRS (International Financial Reporting Standard) 13 for fair valuation. Using auction data on 26,640 lots, we apply this method to compute the current fair value of a basket of 232 different wines. (JEL Classifications: C14, C43, Z11)

Challenges in auditing fair value measurement and accounting estimates

2020 ◽  
Vol 18 (1) ◽  
pp. 51-75
Author(s):  
Babajide Oyewo ◽  
Ebuka Emebinah ◽  
Romeo Savage
Keyword(s):  
Financial Reporting ◽  
Reporting Quality ◽  
Fair Value ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Content Type ◽  
Significant Difference ◽  
Accounting Estimates ◽  
Fair Value Measurement ◽  
Value Measurement

Purpose Following the issuance of International Financial Reporting Standard 13 on fair value measurement (which became operational from January 2013), this study aims to investigate post-implementation challenges in the audit of fair value measurement and accounting estimates in the Nigerian context. Design/methodology/approach Data-collection was through a structured-questionnaire administered on 400 auditors from diverse backgrounds in terms of audit firm size, international affiliation and global presence. Findings Empirical data obtained from 277 auditors were analysed using descriptive statistics, factor analysis, one-way ANOVA, cluster analysis, independent sample t-test and one-way multivariate analysis of co-variance. It was observed that the two highest-ranking and most-prevalent challenges of auditing fair value measurement and accounting estimates are the tendency for managers to manipulate earnings owing to the inability of auditor to effectively test fair value estimates; and the difficulty in testing unobservable inputs due to the application of assumptions and judgement in arriving at estimates by preparers of financial reports. Originality/value While there is no significant difference in the perception of auditors on the audit challenges associated with fair value measurement and accounting estimates, there is a significant difference in the magnitude of audit challenges faced in verifying fair value measurements and accounting estimates across industry sectors. Concerned stakeholders (including but not limited to accounting regulators, auditing standard setters, audit firms, researchers) are importuned to come up with robust and pragmatic measures to curtain these challenges, as the inability of auditors to rigorously verify fair value estimates may jeopardize the very essence of fair value measurement which is to elevate financial reporting quality.

scholarly journals International Financial Reporting standard for Small and Medium-sized entities

2012 ◽  
Vol 5 (1) ◽  
pp. 54
Author(s):  
Z Koppeschaar
Keyword(s):  
South African ◽  
Financial Reporting ◽  
Financial Statements ◽  
Financial Accounting ◽  
International Accounting Standards ◽  
Small Companies ◽  
Small Company ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Accounting Standard

<p>The International Financial Reporting Standard for Small and Medium-sized entities (IFRS for SMEs) was published as a standard by the International Accounting Standards Board (IASB) during July 2009. During 2007 South Africa became one of the first countries and the first country in Africa to early accept the proposed accounting standard (exposure draft of an IFRS for SMEs). The accounting standard will probably also be accepted by numerous other countries. The aim of this article is to investigate the applicability of this accounting standard. The results indicated that the IFRS for SMEs remains too comprehensive for the majority of small companies. The IFRS for SMEs does not satisfy the needs of South African users of small company financial statements, and as a result the accounting requirements should be simplified.</p><p><strong>KEYWORDS:</strong> Financial accounting; Financial reporting requirements; IFRS for SMEs; Small companies; Users of financial statements; Small company financial statements.</p>

scholarly journals FIXED ASSETS ACCOUNTING IN ACCORDANCE WITH THE NEW FEDERAL STANDARD FSBU 6/2020 «FIXED ASSETS»

2021 ◽  
pp. 34-38
Author(s):  
O.V. Eliseyeva
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Fair Value ◽  
Practical Application ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Financial Reporting Standards ◽  
Fixed Assets ◽  
Federal Standard ◽  
Value Measurement

The article examines the main changes in the accounting and tax accounting of fixed assets that have occurred in accordance with the adoption of the new Federal standard FSBU 6/2020 «Fixed Assets». The author compared the current PBU 6/01 «Accounting for fixed assets» with the mandatory for use from the reporting for 2022 FSBU 6/2020 «Fixed assets». The article contains comparative characteristics of regulatory documents and explanations on them. The new regulatory document introduces changes not only to such concepts as cost, depreciation, useful life, but also gives a new, significantly distinguis hable, concept of fixed assets, requirements for the recognition of assets as items of fixed assets. The comparisons made in the article can be useful for practical application. It is noted that the accounting of fixed assets has become closer to International financial reporting standards. For example, such a concept as «fair value» is introduced by FSBU 6/2020 in accordance with International Financial Reporting Standard (IFRS) 13 «Fair Value Measurement». The author concluded that the practical application of all the innovations in the accounting of fixed assets will facilitate the formation of financial statements in accordance with IFRS.

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