Update from the PSAF – Accounting for COVID 19: impact of current economic environment on accounting for surplus funds

At its November 2020 meeting, the PSAF considered the impact of the current economic environment as a result of COVID 19 on the retention of surplus funds.

With reference to the National Treasury Instruction 12 of 2020/2021 on Retention of Surpluses, there may be an increased likelihood in the current environment that requests to retain surplus funds will be denied. This may indicate that entities should recognise provisions rather than contingent liabilities. The PASF agreed that entities should not only consider historical trends when assessing whether they have a liability but should also consider the current environment.

Access the Instruction on the National Treasury’s website here: Instruction 12 of 2020/21.