Proposed revisions to the Headline earnings Circular

12 October 2022
Accounting
South African Accounting Academy

This proposed Circular (which will supersede Circular 1/2021) has been issued by the South African Institute of Chartered Accountants (SAICA) at the request of the JSE Limited (JSE). The exposure draft issued by SAICA is released for public comment in South Africa by the Accounting Practices Committee (APC).

The JSE Listings Requirements require the calculation of headline earnings and disclosure of a detailed reconciliation of headline earnings to the earnings numbers used in the calculation of basic earnings per share in accordance with the requirements of IAS 33 – Earnings per Share. Disclosure of headline earnings is not a requirement of International Financial Reporting Standards (IFRS).

SAICA acknowledges that headline earnings is only one possible measure of an entity’s performance, and the disclosure of headline earnings may be made in addition to the presentation of revenue, expenses, gains and losses in accordance with IFRS. Furthermore, headline earnings is not a mechanism to use in order to adjust an entity’s financial results for disagreements an entity might have with the application of IFRS, or to circumvent the correct accounting treatment.

In this exposure draft, the SAICA’s APC proposes to amend Circular 1/2021. The proposed amendment seeks to update the detailed rules in paragraph 21 for IFRS 17 – Insurance Contracts requirements.

Comments received on the proposed Circular will be discussed by the JSE and the APC in finalising the Circular for issue.

Due date for comments = 7 November 2022

Click here to download the Exposure Draft:

https://saicawebprstorage.blob.core.windows.net/uploads/resources/ED-405-on-Proposed-revisions-to-the-Headline-earnings-Circular-September-2022.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

This applies to clients listed on the JSE
The JSE Listings Requirements require the calculation of headline earnings and disclosure of a detailed reconciliation of headline earnings to the earnings numbers used in the calculation of basic earnings per share in accordance with the requirements of IAS 33 – Earnings per Share. Disclosure of headline earnings is not a requirement of IFRS
As an auditor and independent reviewer, you need to consider compliance with the JSE Listings Requirements.

Relevance to Your clients:

The JSE Listings Requirements require the calculation of headline earnings and disclosure of a detailed reconciliation of headline earnings to the earnings numbers used in the calculation of basic earnings per share in accordance with the requirements of IAS 33 – Earnings per Share. Disclosure of headline earnings is not a requirement of IFRS

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