ASB proposes changes to the Standard on heritage assets (GRAP103)

18 November 2021
Accounting
South African Accounting Academy

The Accounting Standards Board is required in terms of the Public Finance Management Act, Act No. 1 of 1999, as amended (PFMA), to determine generally recognised accounting practice referred to as Standards of Generally Recognised Accounting Practice (GRAP).

The key changes proposed to the Standard are as follows:

Definition of a heritage asset – The definition has been amended to align it more closely with the definition of a heritage asset in legislation. The definition focuses on assets with cultural significance, and explains what cultural significance means in legislation.
Accounting for heritage assets with an alternative use – Heritage assets could have cultural significance while being used for operational or other purposes by an entity. Previously, heritage assets with another purpose were accounted for based on this other use. The new proposal is that all heritage assets should be accounted for using GRAP 103.
Measurement of heritage assets – Stakeholders raised concerns about the measurement of heritage assets. These issues related to (a) initial recognition using fair value, and in what circumstances a reliable measure cannot be determined, (b) determining fair value, and (c) the valuation process. Guidance has been added to GRAP 103 to explain when a reliable measure is not available, and additional methods that could be used to determine fair value. The Board also agreed that entities should keep assessing whether a reliable value becomes available after initial recognition. The National Treasury is working on a project to develop guidance for preparers on the practical issues to consider when obtaining external valuations.
Encouraged disclosures – The encouraged disclosures were reviewed by stakeholders during the review. They indicated that the information, even if provided by entities, is unlikely to be of value to users of the financial statements. The Board proposes deleting most of the encouraged disclosures.
Additional disclosures – Additional disclosures are proposed for an entity’s custodial responsibilities, particularly relating to the disposal of heritage assets, and when heritage assets are borrowed from or on loan to others.

Click here to download the Exposure Draft:

https://www.asb.co.za/wp-content/uploads/2021/10/ED-195-Proposed-amendments-to-GRAP-103-on-Heritage-Assets.pdf

How does this affect you and your clients?

Relevance to Auditors, Independent Reviewers & Accountants:

If your client’s financial reporting framework is Standards of GRAP, you should have an excellent knowledge of this accounting standard, because you need to assess proper accounting treatment and related disclosure requirements of, in this case, heritage assets.
As an auditor or independent reviewer, you can only describe financial statements as complying with Standards of GRAP if they comply with all the requirements of each applicable Standard and any related Interpretations of the Standards of GRAP.
As a compiler, if your client falls within the definition of “entities” in Standards of GRAP, they must apply adopt these when compiling their financial statements – bearing in mind that you are performing the compilation on their behalf.

Relevance to Your clients:

If your client falls within the definition of “entities” in Standards of GRAP, they must apply adopt these when compiling their financial statements, to ensure proper accounting treatment and related disclosure requirements.

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