Update from the PSAF – Issues that emerged from the 2019/20 audit cycle

At its November 2020 meeting, the PSAF discussed the following issues from the 2019/20 audit cycle:

• GRAP 109: Assessing whether an arrangement is a principal agent arrangement remains a step that is missed. Entities often assume that any arrangement with three parties is a principal agent arrangement without making the assessment of whether the definition is met. Refer to FAQ 3.12 for further guidance.
• GRAP 109: Entities were sometimes unsure whether they should recognise a receivable as an agent for monies to be collected for the principal. Entities should consider the terms of their arrangement as it would depend on the responsibilities of the agent.
• GRAP 32: As the Standard is new, entities sometimes found it hard to assess whether an arrangement is a service concession arrangement as defined. Refer to the ASB’s website for a presentation on GRAP 32: https://www.asb.co.za/presentations/.

GRAP 23: Distinguishing stipulations in arrangements between (a) conditions with return obligations that give rise to liabilities, and (b) restrictions which have no accounting consequences, remains a key area of judgement. Access GRAP 23 on the ASB’s website for guidance here. The Accounting Guideline of the Office of the Accountant-General on GRAP 23 provides further guidance and can be accessed here.

This content has been prepared by the Secretariat of the ASB and not the Board.