The Financial Reporting Standards Council and its role in terms of the Companies Act 61 of 1973 and the Companies Act 71 of 2008

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dc.contributor.authorSchmidt, R.
dc.contributor.authorVan Schalkwyk, C. J.
dc.contributor.authorSutherland, P.
dc.contributor.authorLowe, T.
dc.date.accessioned2016-06-03T13:04:33Z
dc.date.available2016-06-03T13:04:33Z
dc.date.issued2010
dc.descriptionThis article is based on chapters of an ongoing MAcc thesis (Prof. Van Schalkwyk, Prof. Sutherland) by R. Schmidt at the Department of Accounting of Stellenbosch University.en_ZA
dc.description.abstractEnglish: Both the Companies Act 61 of 1973 (hereinafter “the Companies Act 1973”) and the Companies Act 71 of 2008 (hereinafter “the Companies Act 2008”) provide for the Financial Standards Reporting Council (hereinafter “the Council”). However, its composition, function and legal form is different under each Act. While the Council was established statutorily as a juristic person under the Companies Act 1973, it will only be established by the Minister of Trade and Industry under the Companies Act 2008. Furthermore, it seems that whether the Council will be granted the status of a juristic person or not is at the Minister’s discretion. In contrast with the Companies Act 1973, the Council is thus no longer as autonomous. The Council’s role in standard setting has been diminished. It is to be a mere advisory forum to the Minister with nothing but non-binding drafting powers. Both the Companies Act 1973 and the Companies Act 2008 contain provisions regarding Financial Reporting Standards (hereinafter “FRSs”). In contrast to the vague provision in the Companies Act 1973, the Companies Act 2008 clearly sets out the legal status of FRSs. They will be regulations (in the form of Government Notices) and will thus be law (delegated legislation). The Council is an organ of state, however in drafting FRSs it does not perform “administrative action” in terms of section 1 of the Promotion of Administrative Justice Act 3 of 2000. The wording of the Acts “in accordance with the International Financial Accounting Standards” (section 440S(2) of the Companies Act 1973) and “consistent with the International Financial Accounting Standards” (section 29(5)(b) of the Companies Act 2008) allows for some discretion to be exercised in the drafting of South African FRSs. The current practice of the Accounting Practices Board to precisely replicate IFRSs is clearly not required by law. It is thus submitted that this practice seems too timid. Contrary to the wording “may” in section 29(4) of the Companies Act 2008, the Minister has no discretion as to whether or not to issue FRSs at all. Nor will an overly long delay in issuing FRSs be acceptable. This emanates from a purposive interpretation of section 29(4), read with sections 5 and 7 of the Companies Act 2008.en_ZA
dc.description.abstractAfrikaans: Beide die Maatskappywet No. 61 van 1973 (hierna “die Maatskappywet van 1973”) en die Maatskappywet No. 71 van 2008 (hierna “die Maatskappywet van 2008”) maak voorsiening vir die Raad op Finansiële Verslagdoeningstandaarde (hierna “die Raad”). Die samestelling, funksie en regsvorm van die Raad verskil egter ingevolge elke Wet. Onder die Maatskappywet van 1973 was die Raad statutêr as regspersoon ingestel, terwyl slegs die Minister van Handel en Nywerheid (hierna “die Minister”) onder die Maatskappywet 2008 die Raad sal instel. Verder blyk dit in die Minister se diskresie te wees om die status van ’n regspersoon aan die Raad toe te ken. In teenstelling met die Maatskappywet van 1973 is die Raad dus nie meer so outonoom soos voorheen nie. Die Raad se rol in die stel van standaarde is ook beperk — tot die formulering van nie-bindende voorstelle. Dit sal bloot as ’n raadgewende forum vir die Minister dien. Beide die Maatskappywet van 1973 en die Maatskappywet van 2008 bevat bepalings aangaande finansiële verslagdoeningstandaarde (hierna “FVSe”). In teenstelling met die onduidelike bepalings van die Maatskappywet van 1973, sit die Maatskappywet van 2008 die wetlike status van die FVSe duidelik uiteen. Die FVSe sal in regulasies (wat in Staatskoerantkennisgewings afgekondig word) vervat word en as sodanig (afgeleide) wetgewing wees. Die Raad is ’n staatsorgaan, alhoewel dit nie “administratiewe aksie” in terme van artikel 1 van die Promotion of Administrative Justice Act (No. 3 van 2000) tydens die formulering van FVSe uitvoer nie. Die onderskeie bewoordings “ooreenkomstig die Internasionale Finansiële Verslagdoeningstandaarde” (artikel 440S(2) van die Maatskappywet van 1973), en “moet ... strook met die Internasionale Finansiële Verslagdoeningstandaarde” (artikel 29(5)(b) van die Maatskappywet van 2008) laat ruimte vir die uitoefening van diskresie in die formulering van die Suid-Afrikaanse FVSe. Die Suid-Afrikaanse Rekeningkundige Praktykeraad se huidige praktyk om die International Accounting Standards Board (IASB) se IFVSe egter sonder enige wysigings uit te reik word duidelik nie deur die wet vereis nie. Dit word dus voorgelê dat hierdie praktyk blyk te konserwatief te wees. Teenstrydig met die bewoording “kan” in artikel 29(4) van die Maatskappywet van 2008, het die Minister geen diskresie daaroor óf die FVSe enigsins uitgereik gaan word óf nie. ’n Oormatige lang vertraging sal ook onaanvaarbaar wees. Beide hierdie afleidings spruit voort uit ’n doelgerigte interpretasie van artikel 29(4), saamgelees met artikels 5 en 7 van die Maatskappywet van 2008.af
dc.description.versionPublisher's versionen_ZA
dc.identifier.citationSchmidt, R., Van Schalkwyk, C. J., Sutherland, P., & Lowe, T. (2010). The Financial Reporting Standards Council and its role in terms of the Companies Act 61 of 1973 and the Companies Act 71 of 2008*. Journal for Juridical Science, 35(1), 28-48.en_ZA
dc.identifier.issn0258-252X (print)
dc.identifier.issn2415-0517 (online)
dc.identifier.urihttp://hdl.handle.net/11660/2687
dc.language.isoenen_ZA
dc.publisherFaculty of Law, University of the Free Stateen_ZA
dc.rights.holderFaculty of Law, University of the Free Stateen_ZA
dc.subjectCompanies Act 61 of 1973en_ZA
dc.subjectCompanies Act 71 of 2008en_ZA
dc.subjectFinancial Standards Reporting Councilen_ZA
dc.subjectAccounting Practices Boarden_ZA
dc.titleThe Financial Reporting Standards Council and its role in terms of the Companies Act 61 of 1973 and the Companies Act 71 of 2008en_ZA
dc.typeArticleen_ZA
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JJS 2010 Volume 35 Issue 1