New guidance re Financial reporting implications for departments on national disaster caused by flooding

15 June 2022
South African Accounting Academy

Following the severe weather events and the subsequent damage caused in various provinces, a national disaster was declared in terms section 27(1) of the Disaster Management Act, (2022). The response, as announced by the President in his address to the nation on 18 April 2022, is in a phased approach; the first being immediate humanitarian relief, phase two relates to stabilisation and recovery which includes rehousing people who have lost homes and restoring provision of services; and the third phase will focus on reconstruction and rehabilitation.

This document provides guidance on how to report the effects in the financial statements. It is important to note that not all departments will be affected in the same manner and/or to the same extent, this guidance should therefore be considered against departmental specific circumstances.

Click here to download the Guidance document:

https://ag.treasury.gov.za/org/tss/Shared%20Documents/Modified%20Cash%20Standard%20Reporting/For%20financial%20year%20ending%2031%20March%202022/Financial%20reporting%20implications%20National%20Disaster%20Flooding%20Final.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, including consideration of the implications of the recent flooding on financial reporting.
This document provides Guidance to departments on the financial statement reporting implications as a result of recent natural disaster events resulting in flooding, including budgeting and reporting on aid assistance, events after the reporting date and related party disclosures, etc.

Relevance to Your clients:

A department that must compile their annual financial statements in accordance with the Modified Cash Standard.
They need to be aware of the Guidance to departments on the financial statement reporting implications as a result of recent natural disaster events resulting in flooding, including budgeting and reporting on aid assistance, events after the reporting date and related party disclosures, etc.

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