Reporting format to be more stringent

The JSE is adopting a stricter financial reporting process, at a time when the Steinhoff and KPMG financial scandals are still being felt.

The JSE is adopting a stricter financial reporting process, at a time when the Steinhoff and KPMG financial scandals are still being felt.

SA fell 29 places, from number one to 30, in the rankings of the quality of auditing and reporting standards, according to the World Economic Forum’s 2017-18 Competitiveness index.

“We had a dive in the WEF index and regaining that integrity is critical,” Trade and Industry Minister Rob Davies said at the JSE on Tuesday.

According to the report, corruption was among the biggest factors hindering business in SA. In order to climb back up the index, all qualifying entities required to submit annual financial results under section 30 of the Companies Act will, from July 1, need to do so through the newly adopted eXtensible Business Reporting Language (XBRL), which replaces the submission of PDF documents.

XBRL is the global standard for exchanging business information. Under the current system, anyone wanting to analyse data would have to transfer the data manually into another system, which may result in errors.

“We’ve come from a difficult period of state capture and corruption. The casualties … have been reputable financial organisations that have been prey to their willingness to compromise their standings,” Davies said.

XBRL supports greater transparency and improves the efficiency of capital markets by helping analysts and investors. It also assists financial regulators, tax authorities and monetary policy authorities by providing more accurate financial statements, he said.

He said it was well known that companies prepared different submissions of different formats from the JSE to government regulatory bodies.

“Companies are confident that none of the entities would find anomalies,” he said.

As the new format is rolled out, companies will still be subject to audit or independent review requirements as prescribed by the Companies Act and will still be required to submit the reports for seven years.

XBRL SA chairman Rakesh Beekum said the focus now was to see how to get all the regulators on board. While the South African Revenue Service will use the data from XBRL for auditing, it is not adopting the system yet.

“The dream is to have one submission channel for all regulators. SARS is not yet on this journey,” said SARS acting commissioner Mark Kingon.