Abstract
This article assesses the extent to which South African public companies that are engaged in agricultural activities are complying with the compulsory recognition and measurement and compulsory and voluntary disclosure requirements of IAS 41 Agriculture. Sixteen large South African public companies with material holdings of biological assets in their statements of financial position were selected for analysis. The results of the analysis show that the majority of South African agricultural companies are using fair value to measure their biological assets at initial recognition as well as at the end of each reporting period. Most of these companies are complying with the compulsory disclosure requirements of IAS 41, and are also providing certain of the recommended voluntary disclosures listed in IAS 41. The study concludes that the measurement methods used by companies to value their biological assets and the nature and extent of both compulsory and voluntary disclosures of these assets are sector-specific. This is consistent with previous research findings. This study contributes to the existing literature by providing a baseline on the financial reporting of agricultural entities in South Africa prior to the implementation of IFRS 13.
Highlights
South African public companies, including those companies listed on the Johannesburg Securities Exchange (JSE), are required in terms of the Companies Act of South Africa, no. 78 (South Africa, 2008), to comply fully with International Financial Reporting Standards (IFRS) in the preparation of their annual financial statements
It should follow that all public South African companies that engage in any form of agricultural activity comply fully with the requirements of International Accounting Standard 41 Agriculture (IAS 41)
Because this study focuses on both the fair value measurement of biological assets as well as the compulsory and voluntary disclosures listed in IAS 41, this literature review looks at areas of debate relevant to both these topics
Summary
South African public companies, including those companies listed on the Johannesburg Securities Exchange (JSE), are required in terms of the Companies Act of South Africa, no. 78 (South Africa, 2008), to comply fully with International Financial Reporting Standards (IFRS) in the preparation of their annual financial statements. It should follow that all public South African companies that engage in any form of agricultural activity comply fully with the requirements of International Accounting Standard 41 Agriculture (IAS 41). IAS 41 is applicable to entities engaged in agricultural activities for periods beginning on or after 1 January 2003 (IASC, 2001). In terms of IAS 41, entities engaged in agricultural activities are required to measure all biological assets at fair value less estimated point-of-sale costs on initial recognition and at the end of each reporting period. They are required to measure all agricultural produce at fair value less point-of-sale costs at point of harvest
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