National Treasury: Modified Cash Standard for 2025/26 and 2026/27

National Treasury: Modified Cash Standard for 2025/26 and 2026/27

• 24 June 2025
• Accounting
• South African Accounting Academy

Summary:
The Office of the Accountant-General (OAG) has published relevant resources on the Modified Cash Standard for 2025/26 and 2026/27.

Article:

The latest Modified Cash Standard is for the Effective Financial Management in the South African Public Sector, and is effective from 1 April 2026.

The Standard comprises of separate chapters for assets, liabilities, revenue and expenditure. More than one chapter may exist for each item depending on the nature and complexity of the topic. Each chapter sets out the recognition, recording, measurement, presentation and disclosure requirements on these items. 

The Public Finance Management Act (PFMA), No 1 of 1999, requires departments to “prepare financial statements for each financial year in accordance with generally recognised accounting practice”. The Treasury Regulations require the accounting officer of a department to ensure that the annual financial statements are prepared on a modified cash basis in accordance with the formats prescribed by the National Treasury.

The Office of the Accountant-General (OAG) in the National Treasury has accordingly developed and issued the Modified Cash Standard which sets out the principles for the recognition, recording, measurement, presentation and disclosure of information required in terms of the prescribed formats.

Departments that claim compliance with the modified cash basis of accounting must adhere fully with the principles, presentation and disclosure requirements contained in this Standard in order to achieve fair presentation, and compliance with the PFMA and its regulations.

The 180-page MCS that is effective from 1 April 2025 for the 2025/2026 period can be downloaded at https://ag.treasury.gov.za/org/tss/Shared%20Documents/Modified%20Cash%20Standard%20Reporting/For%20financial%20year%20ending%2031%20March%202026/Authoritative%20Material/MCS%202025_2026%20Final%20for%20publishing.pdf 

Click here to download the 233-page MCS for 2026/2027:

https://ag.treasury.gov.za/org/tss/Shared%20Documents/Modified%20Cash%20Standard%20Reporting/For%20financial%20year%20ending%2031%20March%202027/Authoritative%20Material/Modified%20Cash%20Standard%20effective%201%20April%202026.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• The PFMA is yet another piece of legislation that your relevant national and provincial departmental clients must comply with, and which you must assess compliance with.  If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (NOn-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.

• As an auditor and independent reviewer, you need to consider and assess compliance with the departments that use the MCS, as required by the PFMA.

• Compilers of financial statements must be aware of the latest updates and proposals to the MCS.

Relevance to Your clients:

• Applies to all national and provincial departments that must compile their annual financial statements in accordance with the Modified Cash Standard.
• Compilers of financial statements must be aware of the latest updates and proposals to the MCS.

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