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- Volume 12, Issue 2, 2004
Meditari : Research Journal of the School of Accounting Sciences - Volume 12, Issue 2, 2004
Volume 12, Issue 2, 2004
Author K. BaracSource: Meditari : Research Journal of the School of Accounting Sciences 12, pp 1 –19 (2004)More Less
This paper examines international pronouncements on the audit function and Internet financial reporting and assesses whether the practices and policies reflected in these pronouncements are followed by the auditors of top South African companies. As a secondary objective, this study also attempted to determine how South African auditors perceive the influence that Internet reporting may have on the auditing profession in future.
The analysis shows that many of the procedures required of auditors and Internet reporting have already been defined by international standardsetting bodies, but that the audit firms which responded to the questionnaire in this study do not yet have well-established policies and practices regarding Internet reporting.
There is still some uncertainty regarding Internet financial reporting in the responding audit firms, as was reflected in their perceptions of the future of Internet financial reporting and its impact on the audit function. The responding audit firms were reluctant to expand their responsibilities with regard to Internet financial reporting.
Author R. ButlerSource: Meditari : Research Journal of the School of Accounting Sciences 12, pp 21 –39 (2004)More Less
Suppliers suffer losses when customers repudiate B2B order transactions in open account systems. Appropriate internal control measures should be implemented to address repudiation. According to the King Report on Corporate Governance for South Africa (2002), the responsibility for internal control lies with the management of a company.
This article aims to assist management in reducing the risk of repudiation to an acceptable level, by providing a framework of recommended internal control measures. The framework was compiled after considering:
Requirements in the Electronic Communications and Transactions Act that make digital contracts valid.
Existing control frameworks, control objectives and internal control measures addressed by COBIT® and AICPA / CICA's Trust Services Principles and Criteria.
Author G. GevaSource: Meditari : Research Journal of the School of Accounting Sciences 12, pp 41 –65 (2004)More Less
The auditing and accounting profession must provide appropriate disclosure of the going concern status of an entity, especially when that status is threatened. Auditors have an obligation to consider the wider legal environment of an entity, including all relevant case law, when they perform any such audit. Despite this obligation, the auditing profession appears to violate important legal principles. The auditor's approach to the going concern status of an entity is contained in the South African Auditing Standard, SAAS 570 'Going Concern'. The South African legal framework's approach to this issue emerges from the Supreme Court case Philotex (Pty) Ltd v Snyman. This article explores the fundamental disagreement between the auditor's approach to the going concern problem and that adopted in terms of the wider South African legal framework.
Value-added tax on new residential properties : a comparative study to establish possible alternatives regarding developers registered for VAT purposesAuthor L. JulyanSource: Meditari : Research Journal of the School of Accounting Sciences 12, pp 67 –84 (2004)More Less
This article reports on a study on the value-added tax (VAT) levied on new residential properties sold to individuals by developers registered for VAT purposes. The objective of the research was to evaluate the current VAT provisions applicable to new residential properties in South Africa by measuring them against the principles of taxation, and by comparing the results with those obtained for the United Kingdom, Canada and Australia. Similarities and differences are established and evaluated. It is recommended that the supply of new residential properties in South Africa be zero rated.
Quality assurance in internal auditing : an analysis of the standards and guidelines implemented by the Institute of Internal Auditors (IIA)Author M. MaraisSource: Meditari : Research Journal of the School of Accounting Sciences 12, pp 85 –107 (2004)More Less
Via the Institute of Internal Auditors, founded in 1941, the internal auditing profession actively promote the quality of internal auditors and internal audit activities. Since 1999, internal auditing standards have been revised. From 1 January 2002, all internal audit activities/any consultant rendering internal auditing services must undergo quality control, according to the provisions of Attribute Standard 1300. The revised internal auditing standards on quality control in internal audit activities reflect fundamental changes for the internal auditing profession. This article analyses the formal prescriptions and guidelines on quality in internal audit activities contained in the internal auditing standards and related practice advisories.
Source: Meditari : Research Journal of the School of Accounting Sciences 12, pp 109 –123 (2004)More Less
Scrip dividends have become increasingly popular in South Africa since the introduction of secondary tax on companies (STC) in the 1993 budget.
To date there is no accounting standard in South Africa that prescribes a particular accounting treatment for scrip dividends; therefore, different accounting approaches are used in South Africa to account for scrip dividends. These different approaches do not always meet the substance over form principle, as required by Generally Accepted Accounting Practice (GAAP). The result is that the information disclosed to the users of the financial statements differs from company to company.
This study proposes an accounting treatment for scrip dividend schemes in South Africa. It concludes that the reinvestment approach is the most acceptable accounting treatment for scrip dividend schemes in South Africa.
Source: Meditari : Research Journal of the School of Accounting Sciences 12, pp 125 –139 (2004)More Less
Scrip dividend schemes provide shareholders with the option to choose shares instead of a cash dividend. Scrip dividends became popular in South Africa after the introduction of Secondary Tax on Companies (STC) in 1993.
Thus far, no guidance on the recognition, measurement or disclosure of scrip dividends has been issued by the South African Institute of Chartered Accountants (SAICA).
This article proposes disclosure regarding scrip dividend schemes that will provide relevant information to the users of financial statements. The proposed disclosure is based on the assumption that entities recognise and measure scrip dividends in accordance with the re-investment method, as opposed to the capitalisation issue method.
Source: Meditari : Research Journal of the School of Accounting Sciences 12, pp 141 –164 (2004)More Less
This paper investigates the debate as to whether employee share options (ESOs) should be expensed in an entity's financial statements as required by the IASB'sIFRS 2 - Share-based payment (2004). The paper presents arguments for and against expensing ESOs, demonstrating that compensation of employees via ESOs is a bona fide expense in terms of the recognition and measurement criteria of the IASB Framework. It concludes that, the substance of an ESO transaction is that the entity pays an employee for his services, albeit with a different financial instrument. Consequently, the accounting treatment of such compensation should be the same as for any other payment of services of an employee.
The discretionary powers of the Commissioner for the South African Revenue Service - are they constitutional?Source: Meditari : Research Journal of the School of Accounting Sciences 12, pp 165 –183 (2004)More Less
The Commissioner for the South African Revenue Service has wide discretionary powers. In this article, the meaning, purpose, types, extent and exercise of these powers are examined. Do these powers promote uncertainty and / or unfairness and inconsistency, and if so, which of these powers do so? The extent of the powers given by some of the discretions not specifically subject to objection and appeal is questioned: no discretionary powers involving liability for tax should be allowed, especially not without the right to objection and appeal.
Because of the general administrative relationship between the Commissioner and the taxpayer and because exercising a discretionary power constitutes an administrative action, the constitutionality of this power was examined in terms of taxpayers' right to just administrative action. Only discretionary powers not specifically made subject to objection and appeal are open for constitutional attack.
Source: Meditari : Research Journal of the School of Accounting Sciences 12, pp 185 –201 (2004)More Less
In 1994, after the 1993 Constitution had been adopted, the Katz Commission questioned the constitutionality of some provisions of the Income Tax Act. The purpose of this article is, firstly, to follow up on the progress made in amending the provisions concerned and, secondly, to establish reasons for the lack of success achieved by taxpayers who attack the constitutionality of certain provisions. Some progress has been made, but in this article, the author argues that SARS should amend section 104(2) of the Act. The establishment of a specialist ombudsman's office is also proposed. Such an office that could assist taxpayers to enforce their constitutional rights against the Commissioner is the essential missing element.