Feedback from GRAP 104 Financial Instruments Reference Group

The Reference Group members met on 20 September 2023 to discuss the requirements in GRAP 104 (revised 2019) on inter-entity loans and disclosure of financial instruments.

Inter-entity loans

A common issue experienced in the public sector is the classification of an agreement where money is given by one entity to another entity within the same economic entity. The classification of the agreement can be a loan, an investment or something other. Members highlighted the importance of documentation and the need to understand the rights and obligations of the parties to the agreement. This enables the entity to classify the inter-entity transaction correctly. 

Disclosure of financial instruments

The importance of providing disclosure relevant to an entity was highlighted. Entities are encouraged to steer away from providing boilerplate disclosure and to provide disclosure that is specific to the entity.

There are new disclosure requirements in GRAP 104 (revised 2019). Significant changes have been made to the disclosure relating to the credit risk of financial assets. This is largely due to the change in the impairment model in GRAP 104 (revised 2019).

Transitional arrangements

The transitional arrangements include that entities apply GRAP 104 (revised 2019) retrospectively in accordance with GRAP 3 on Accounting Policies, Changes in Accounting Estimates and Errors. GRAP 104 (revised 2019) is not applied to items that have already been derecognised at the date of initial adoption.