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ASB: GRAP 104 on Financial Instruments (revised) Snapshot – Key disclosure requirements: Parts 1 and 2
- 06 May 2025
- Financial Reporting
- South African Accounting Academy
Summary:
The Accounting Standards Board (ASB) has published an insightful news article (in 2 parts) which serves as a snapshot of the key disclosure requirements of GRAP 104 (Revised) Financial Instruments.
Article:
GRAP 104 requires entities to disclose pertinent information about financial instruments, the nature and extent of risks from these instruments, as well as how the entity is managing those risks. To provide the necessary context for users, the Standard requires the disclosure of accounting policies and the significance of financial instruments for an entity’s statements of financial position and performance.
Entities should disclose all material information relating to financial instruments that are relevant to users’ evaluation of an entity’s financial instruments.
Part 1 of the news article explains the disclosure of accounting policies and the impact of financial instruments on the statements of financial position and performance, under the following subheadings:
- Why are accounting policies necessary and which policies must be disclosed?
- How do entities determine the classes of financial instruments to disclose?
- What information should be disclosed so that users can evaluate the significance of financial instruments?
- Statement of Financial Position
- Statement of financial performance
Part 2 of the news article explains the disclosure on the nature and extent of risks from financial instruments, as well as how the entity is managing those risks, under the following subheadings:
- Qualitative and quantitative disclosure
- Credit risk
- Liquidity risk
- Market risk
The Amendments to GRAP 104 on Financial Instruments are effective from 1 April 2025.
The purpose of the financial statements is to furnish users with the information necessary to make informed decisions, evaluate the entity's financial health and hold management accountable. The disclosure requirements in the Standards of GRAP ensure relevant, useful and understandable financial reporting that meet users' information needs.
The ASB had previously published 2 fact sheets on GRAP 104 (Revised) on Financial Instruments in August 2023. For more information on how to apply the disclosure requirements of GRAP 104 (revised), access these fact sheets at:
- https://www.asb.co.za/wp-content/uploads/2023/08/Fact-Sheet-1of2-Disclosures-Financial-Position-and-Performance.pdf
- https://www.asb.co.za/wp-content/uploads/2023/08/Fact-Sheet-2of2-Disclosures-Nature-and-Extent-of-Risks.pdf
Click here to access the newsletters and snapshots:
- https://www.asb.co.za/stay-informed/
- Part 1: https://mailchi.mp/2045171c6962/accounting-standards-board-newsletter-4
- Part 2: https://www.asb.co.za/stay-informed/GRAP%20104%20on%20Financial%20Instruments%20(revised)%20snapshot:%20Key%20disclosure%20requirements%20Part%202
Relevance to Auditors, Independent Reviewers & Accountants:
- You need to assess fair presentation and compliance with the Standards of GRAP.
- Non-compliance with GRAP standards may lead to a modified audit opinion.
- You should be aware of the latest publications issued by the relevant board, e.g. ASB.
- Entities should disclose all material information relating to financial instruments that are relevant to users’ evaluation of an entity’s financial instruments.
- As an auditor and independent reviewer, you need to consider and assess compliance with GRAP104 and thus you need knowledge of this published guidance on financial instruments.
Relevance to Your Clients:
- GRAP 104 is applicable to all entities preparing their financial statements on the accrual basis of accounting.
- Relevant entities should be aware of the latest publications issued by the standards board, e.g. ASB.
- Entities should disclose all material information relating to financial instruments that are relevant to users’ evaluation of an entity’s financial instruments.