Isolated or accounting leader? A historical analysis of the forces behind standard setting in South Africa

Accounting

Speaker:Prof Grietjie Verhoef, University of Johannesburg
Date: Wednesday 4 September 2013
Time: 14:00 - 16:00
Location: Streatham Court B

Further details

What are the driving forces behind standard-setting in accountancy? Why did the accountancy profession in South Africa embark on a standard-setting process? The accounting profession in South Africa developed South African GAAP – General Accepted Accounting Practice – since the early 1970s. Accounting standards for the local market context were not developed in isolation from international accounting standards, since accountants and auditors from different parts of the British Commonwealth as well as other parts of the world, engaged in public practice in South Africa. Reciprocity agreements with professional accounting associations since the 1950s resulted in a very international footprint of the accounting profession in South Africa. International sanctions limited, but never entirely shut off international business links of South African and international business. Access to reliable financial information on South African businesses was vital for international investors. This depended on the availability of ‘decision useful’ financial information, which was premised on high accounting standards and internationally accessible and comparable accounting information. The integration of accounting knowledge internationally was beginning to take shape through the initiatives to establish the International Accounting Standards Board in 1972. South African accountant participated in the international standard-setting process since the beginning. This collaboration occurred on the back of a well-established local standard-setting process.
How has the internationalisation of accounting knowledge impacted on the development of South African GAAP? How has the South African accounting profession interacted with the internationalisation of accounting knowledge and what impact did these developments have on the development of South African GAAP? This paper explores the forces behind the development of the standard-setting process in South Africa, in comparison to similar developments in other parts of the British Commonwealth. Has standard-setting occurred in isolation in South Africa? Were the forces behind those developments local or international? How did these initiatives compare with the emergence of a standard-setting process in the rest of the Commonwealth?. Were the developments of South African GAAP in isolation or was it part of the legacy of the long British tradition in the accounting profession in South Africa? It is suggested that a persistent emphasis on high standards of accounting education and practical training, led to the formulation of SA GAAP of a sufficiently compliant standard, which enabled South Africa to be the first country to implement IFRS in 2005. This development had a profound impact on the international position of the South African accountancy profession and accounting standards.