Do you struggle to understand municipal financial statements? The National Treasury is looking to help.

Government is accountable for the management and use of resources entrusted to it – to the providers of these resources (e.g. tax payers), and those who depend on government’s services. These stakeholders require information from government to make decisions and hold government accountable. This information is typically included in financial statements, and the Standards of GRAP are developed to provide users with the information they need.

Research by the Accounting Standards Board (the Board) and the National Treasury indicated that users do not effectively use the financial statements and other information in the annual report. This was found to be particularly true for municipal users. There are various reasons for this, including that:

  • the financial statements may be complex and therefore difficult to understand; and
  • preparing financial statements is often seen as a compliance exercise by preparers. This results in financial statements providing boilerplate information, or not providing information in an understandable manner.

To assist with the issue, the National Treasury initiated a project to develop material to assist the preparers and users of municipal financial statements in their preparation, analysis and understanding of the financial statements and broader annual reports. The Board agreed to support the National Treasury in their project as resolving the issue would enhance the relevance of the ASB’s work.

In the meantime, preparers may find previous research of the Board useful when preparing their 2022 financial statements. The research includes information on ways in which information from the financial statements could be communicated more effectively to users. Access the research on the ASB’s website: here

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