Faculty of Economic and Management Sciences
School of Financial Sciences
Department of Accounting
Selected Highlights from Research Findings
Global convergence of accounting standards is a recognised pre-requisite for the proper functioning of international capital markets. As a result of the need to keep financial reporting of companies in South Africa globally relevant, the South African Institute of Chartered Accountants took a decision during 2003 to issue the international text of International Financial Reporting Standards (IFRS) in South Africa, without any amendments.
In certain instances a need exists for the IFRS to be interpreted for specific aspects, transactions or other issues that only occur in the South African environment, as such aspects, transactions or other issues are not specifically or clearly addressed in the IFRS. One such aspect relates to the accounting treatment of Secondary Tax on Companies (STC), and specifically whether deferred tax should be recognised based on the distributed or undistributed rate.
The literature study has indicated strong arguments for both the use of the distributed and the undistributed rate. The empirical study, however, concluded that the recognition of a deferred tax liability prior to the recognition of a dividend is not appropriate, as a majority of the respondents believe that no “past event” has occurred and therefore the definition of a liability in terms of the IASB Framework is not satisfied.
Mr ER Venter
Accounting
+27 (0) 12 420 5519
elmar.venter@up.ac.za
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