Old statements still prepared under SA GAAP
A client's old statements say SA GAAP, which was withdrawn. Which framework applies now, how to use the old figures as comparatives, and what to reword.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa
A new client arrives with a box file of past statements. The most recent set, prepared by the previous accountant, says on its basis-of-preparation page that it complies with "South African Statements of Generally Accepted Accounting Practice". The client sees nothing wrong with that. Your manager does.
SA GAAP no longer exists as a framework a company can report under. That does not make the old figures useless, but it does mean the firm has to decide which framework applies now, how far the prior figures can be relied on as comparatives, and how the first set under your name should describe itself. This article walks through each of those decisions.
Why SA GAAP went away
The IFRS Foundation's jurisdiction profile for South Africa states that SA GAAP was withdrawn for years commencing on or after 1 December 2012, because SA GAAP was identical to IFRS Standards. The profile also notes that listed companies had been required by the JSE to use IFRS Standards from 1 January 2005.
The profile states that since May 2011 the Companies Act Regulations refer directly to "IFRS as issued from time to time by the IASB or its successor body". Once the law pointed straight at the IASB's standards, a local copy of them had no purpose.
So any set of statements for a year that began after that date and still claims SA GAAP compliance is describing a framework that was not available. Sometimes this is a copy-and-paste habit carried forward for years; sometimes the statements were prepared on a loose basis that does not match any framework at all. Your first job is to find out which.
Which framework applies now
There are three possibilities for most private companies, and the client's public interest score and circumstances decide between them.
- Full IFRS. The profile notes that some companies whose equity is not publicly traded must use full IFRS because they fall outside the scope of the IFRS for SMEs Standard.
- IFRS for SMEs. The profile states that all SMEs required by the Companies Act regulations, or choosing, to prepare general purpose financial statements may use the IFRS for SMEs Standard, which South Africa adopted without modification, or full IFRS instead.
- Own accounting policies. The profile states that SMEs with a public interest score under 100 whose statements are internally compiled may use their own accounting policies if no other framework is required of them.
Work out which applies before touching the comparatives. The framework decides what the comparatives need to look like. For the decision itself, see choosing a reporting framework.
No dual reporting
Some previous accountants tried to have it both ways, with a basis note claiming compliance with SA GAAP "and" IFRS, or with IFRS "as applied in South Africa". The profile states that the auditor's report and/or the basis of presentation footnote states that financial statements have been prepared in conformity with IFRS Standards, and that dual reporting, meaning conformity with both IFRS and a local GAAP, is not allowed.
The first set your firm prepares should name one framework, plainly.
Using the old statements as comparatives
The figures in last year's statements may still be the best starting point for comparatives, even if the label on them was wrong. What matters is whether the measurement behind them is consistent with the framework you are now applying.
A practical review of the prior set:
- Read every accounting policy note and compare it with the framework you have chosen.
- List any area where the old policy differs, such as revenue timing, depreciation, or how loans from shareholders were presented.
- For each difference, decide whether the prior figure must be restated, and document why.
- Agree the opening balances to the general ledger the client now holds.
- Record the conclusion on the file before the first draft goes to the partner.
If the client is changing framework, the transition rules of the framework you are moving to govern how comparatives are restated; do not simply relabel the old numbers.
Getting the prior figures into Achekam
Staff can upload last year's financial statements as a PDF, and Achekam reads them into figures that a person reviews and approves before they are used as comparatives. Where AI is available, it fills in details such as the entity name, never numbers. The review step is where the work in the previous section happens: a figure that needs restating is corrected before approval rather than carried in and fixed later.
The cash flow statement's current-year column is worked out from the change in balances, and staff can type their own figure for any line, which then takes priority. Comparatives can come from a person's figures, last year's issued statements or a prior-year set a person reviews. For a first year after another accountant, the cash flow comparatives are often where the old set is weakest, so check them line by line.
Rewording the basis of preparation
The new basis note should say three things clearly: which framework the statements comply with, that they are prepared on the going-concern basis if that is the case, and the measurement basis used, such as historical cost. Where the prior year was presented on a different basis, say so and point to the note that explains any restatement.
Avoid any wording that mentions SA GAAP as a current framework. A reader who sees it will reasonably wonder what else in the set has not been updated. More on taking over a client from another practitioner is in the first year after a previous accountant.
The page to send the client
The IFRS Foundation's jurisdiction profile for South Africa records when SA GAAP was withdrawn, which framework each kind of company uses and why dual reporting is not allowed. Send it to the client with a short note explaining why this year's statements will describe themselves differently, before they see the draft and ask.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
