Van Wyk, H. A.Lamprecht, Christiaan2017-06-282017-06-282016http://hdl.handle.net/11660/6429Thesis (Ph.D. (Centre for Accounting))--University of the Free State, 2016𝑬𝒏𝒈𝒍𝒊𝒔𝒉 Companies listed on the JSE are required to prepare annual financial statements in terms of IFRSs on the basis of a going concern assumption. This assumption implies that the company will continue to exist in the foreseeable future. In financial statements based on this assumption, assets and liabilities are measured using a mixture of measurement bases: some measurements are based on historical costs and some on current values. However, when liquidation is imminent or the company has no alternative but to liquidate, the IFRSs does not prescribe an alternative to the going concern assumption. Nevertheless, if there is an underlying assumption of liquidation it is presumed that certain elements in the financial statements will be measured at liquidation values. The South African Companies Act allows a company in financial distress to apply for business rescue, the aims of which are to reorganise the company’s affairs in order for it to continue to exist on a solvent basis or, if that is not possible, to render a better return for creditors and shareholders than under immediate liquidation. However, because financial distress indicates that technical or commercial insolvency is imminent, a company under business rescue is not necessarily a going concern but neither is it in liquidation. Thus, the appropriate underlying assumption to use when preparing its financial statements, as well as the supporting measurement bases for its assets and liabilities, is problematic. In such cases, neither the application of IFRS and assumed going concern status, nor the liquidation basis may provide the most decision-useful information to the users of financial statements. The aim of this research was to develop a financial reporting framework for a South African listed company under business rescue, with specific reference to the underlying financial reporting assumption that should be used, and the measurement bases of assets and liabilities that would be preferable in a business rescue context. Owing to the exploratory nature of the research aim, the research design was a-theoretical using an inductive mode of reasoning. In this study, the discovery of theory relates to identifying an appropriate underlying assumption to use, supported by context-specific measurement bases for assets and liabilities. The research instrument was based on a comprehensive literature review of various aspects that influence the financial reporting of a South African listed company under business rescue. Empirical primary data were collected by way of a structured research questionnaire and analysed using statistical and content analysis methods. The respondents consisted of senior business rescue practitioners, JSE-accredited auditors, heads of departments of accounting and auditing at various universities and other IFRS experts. The empirical results in this study provide indicators for assessing the going concern status of a company under business rescue and point to the existence of a period of uncertainty during which a company may not be considered a going concern, but the alternative, namely, an underlying assumption of liquidation, is also not yet applicable. The results therefore revealed an uncertain period in the life of a company under business rescue that is not currently considered in the theory of accounting. An underlying assumption is accordingly suggested that fits in between going concern and liquidation. It is recommended that this underlying assumption be called 'company under business rescue'. The empirical results further show that the needs of the users of a listed company’s financial statements change when it enters business rescue. Users now prefer current values, specifically those based on exit prices, to measure the assets and liabilities. This indicates a preference for an exit-price-based, current-value accounting model. The empirical results of this study culminated in a financial reporting framework for a South African listed company under business rescue. ___________________________________________________________________𝑨𝒇𝒓𝒊𝒌𝒂𝒂𝒏𝒔 JSE-genoteerde maatskappye is verplig om finansiële state op ʼn lopende saak-aanname in terme van internasionale finansiële verslagdoeningstandaarde (IFVS) op te stel. Hierdie aanname dui daarop dat die maatskappy in die afsienbare toekoms sal bly voortbestaan. Die bates en laste in lopende saak-gebaseerde finansiële state word met behulp van 'n mengsel van metingsbasisse gemeet: sommige metings is op historiese koste en sommige op huidige waardes gebaseer. ʼn Veronderstelde alternatief tot die lopende saak-aanname, dit wil sê wanneer likwidasie onafwendbaar is of die maatskappy geen ander keuse het as om te likwideer nie, word nie in IFVS voorgeskryf nie. Desnieteenstaande, onder ʼn onderliggende aanname van likwidasie is die veronderstelling is dat sekere elemente in die finansiële state teen likwidasiewaardes gemeet sal word. Die Suid-Afrikaanse Maatskappywet laat 'n maatskappy in finansiële nood toe om vir sakeredding aansoek te doen. Die doelwitte daarvan is om die maatskappy toe te laat om sy sake te herorganiseer ten einde op 'n solvente basis voort te bestaan of, as dit nie moontlik is nie, 'n beter opbrengs aan krediteure en aandeelhouers te lewer as wat onder onmiddellike likwidasie moontlik sou wees. Aangesien finansiële nood dui op dreigende tegniese of kommersiële insolvensie, is 'n maatskappy onder sakeredding nie noodwendig 'n lopende saak nie, maar ook nog nie in likwidasie nie. Dus, die toepaslike onderliggende aanname vir gebruik in die voorbereiding van sy finansiële state, asook die gepaartgaande metingsbasisse vir bates en laste is problematies. In sulke gevalle kan nóg die toepassing van IFVS, met sy veronderstelde lopendesaak-status, nóg die likwidasie basis die mees nuttige inligting vir besluitneming aan die gebruikers van finansiële state verskaf. Die navorsingsdoel was om 'n finansiële verslagdoeningsraamwerk vir 'n Suid-Afrikaanse genoteerde maatskappy onder sakeredding te ontwikkel, met spesifieke verwysing na watter onderliggende finansiële verslagdoeningsaanname gebruik moet word, asook watter metingsbasisse vir bates en laste in ʼn sakereddingskonteks verkies word. Aangesien die navorsingsdoel ondersoekend van aard is, was die navorsingsontwerp a-teoreties en die redenasie induktief. In hierdie studie verwys die ontdekking van teorie na die identifisering van 'n toepaslike onderliggende aanname om te gebruik, ondersteun deur konteks-spesifieke metingsbasisse vir bates en laste. Die navorsingsinstrument was gebaseer op ʼn omvattende literatuurstudie oor die verskillende aspekte wat die finansiële verslagdoening van 'n Suid-Afrikaanse genoteerde maatskappy onder sakeredding beïnvloed. Empiriese primêre data is deur middel van 'n gestruktureerde navorsingsvraelys ingesamel en met behulp van statistiese- en inhoudsanalisemetodes ontleed. Die respondente het uit senior sakeredding praktisyns, JSE-geakkrediteerde ouditeure, departementshoofde van rekeningkunde en ouditkunde aan verskeie universiteite en ander kundiges in IFVS bestaan. Die empiriese resultate in hierdie studie verskaf aanwysers wat gebruik kan word om die lopendesaak-status van 'n maatskappy onder sakeredding te bepaal. Die resultate toon die bestaan van 'n tydperk van onsekerheid waarbinne 'n maatskappy nie as 'n lopende saak beskou kan word nie, maar die alternatief, naamlik ‘n likwidasie onderliggende aanname, ook nog nie van toepassing is nie. Die resultate wys dus op 'n tydperk van onsekerheid in die lewe van 'n maatskappy wat tans nie in die teorie van rekeningkunde aangespreek word nie. Gevolglik word 'n onderliggende aanname voorgestel wat tussen-in die lopende saak en likwidasie-aannames pas. Die aanbeveling is om so 'n onderliggende aanname 'n ‘maatskappy onder sakeredding’ te noem. Die empiriese resultate toon verder dat die behoeftes van die gebruikers van finansiële state verander sodra 'n genoteerde maatskappy in sakeredding gaan. Gebruikers verkies nou huidige waardes, veral dié wat op uittreepryse gebaseer is, om die bates en laste te meet. Hierdie dui op 'n voorkeur vir 'n uittreeprys-gebaseerde huidige waarde rekeningkunde model. Die empiriese resultate in hierdie studie het gelei tot 'n finansiële verslagdoeningsraamwerk vir 'n Suid-Afrikaanse genoteerde maatskappy onder sakeredding. ___________________________________________________________________enAccounting theoryBusiness rescueBusiness modelDecision-usefulFinancial statementsFinancial reporting frameworkForeseeable futureGoing concernIFRSLiquidationMeasurement basesFinancial statements -- South AfricaInternational financial reporting standardsThesisUniversity of the Free State