RESEARCH FINDINGS
6.6 Content
differential corporate reporting may not adequately address the South African differential corporate reporting dilemma. Multiple differential corporate reporting thresholds each with its own reporting requirements, may therefore be the most comprehensive solution in the South African context. A precedent for multi-tiered differential reporting that was discussed in chapter 4, can be found in New Zealand. New Zealand companies that do not have public accountability, amongst other requirements, qualify for limited differential reporting options (ICANZ,2002:para4.25), whereas very small New Zealand companies need only comply with very limited reporting requirements (para4.7). Further, this result supports the current multi- tiered company proposals of the South African Department of Trade and Industry (DTI,2004), the thresholds for and reporting requirements of which, are currently being investigated by the SAICA (SAICA,2004d).
between respondents' assessments of the appropriateness of the presentation and disclosure requirements and the recognition and measurement requirements of each of the twelve statements of SA GAAP listed in table 5-2. At the ninety-five percent level of confidence no significant differences were found. This result indicates that RA&As perceive equally the need for differential corporate reporting requirements in respect of both the presentation and disclosure requirements and the recognition and measurement requirements of SA GAAP.
The results of many of the chi-square tests of most statements of SA GAAP tested for in respect of both JSE listed entities and a big public company, that is entities A to C, were invalid as the expected frequencies in respect of the inappropriate cells were frequently less than five. In respect of AC 105, AC 108 and AC 123 only, did the invalid tests extend to another entity, namely, entity D. All invalid chi-square values were discarded. However, a review of the summary of responses presented in table 6-10 in respect of entities A to D shows that both the presentation and disclosure requirements and the recognition and measurement requirements of all of the statements of GAAP tested for are strongly perceived to be appropriate to these entities. This indicates that there is unlikely to be any significant difference between RA&As' perceptions of the appropriateness of the presentation and disclosure requirements and the recognition and measurement requirements of SA GAAP to entities A to D.
This finding supports the principle of granting recognition and measurement concessions which is found in current Canadian (CICA,2002a) and New Zealand (ICANZ,2002) differential reporting requirements and the proposed South African requirements (SAICA,2003a) presented in chapter 4. However, this finding indicates some support for more extensive recognition and measurement concessions. Further, this finding is incongruent with the IASB's rebuttable presumption that no recognition and measurement modifications should be granted to SMEs (IASCF,2004).
6.6.2 Cash flow statement
The aggregate responses presented in table 6-10 found that the majority of the respondents perceive it to be appropriate that all companies, except small private companies with a limited financial statement user base, that is, entity G, be required to present a cash flow statement.
Further, the majority of respondents perceived that cash flow statements are not appropriate for close corporations, except big close corporations with a wide user base, that is, entity J.
The results of the chi-square tests performed at the ninety-five percent level of confidence confirm that there are significant differences between responses for entities A to D compared
with responses for all other entities, except that no significant difference was found between the responses for a small public company, that is, entity D, and a big private company with a wide financial statement user base, that is, entity F.
Chi-square tests for significant differences in the range of entity E to L revealed significant differences in respect of: (i) entity size except in respect of close corporations with users, and (ii) user base, except in respect of big private companies. No significant differences were found in respect of the entity form variable.
The results indicate that RA&As perceive the requirement to prepare a cash flow statement appropriate to all public companies, all private companies except small private companies with a narrow user base, and big close corporations that have a wide financial statement user base.
This finding supports the current multi-tiered company proposals of the South African Department of Trade and Industry (DTI,2004), the thresholds for and reporting requirements of which, are currently being investigated by the SAICA (SAICA,2004d).
6.6.3 Related party disclosures
The aggregate responses presented in table 6-10 found that the majority of respondents perceive the requirements of SAICA (2000d), that is, AC 126, to be appropriate only to securities exchange listed entities, public companies, big private companies with users and big close corporations with users, that is, entities A to D, F & J.
The results of the chi-square tests performed confirm that at the ninety-five percent level of confidence there are significant differences between responses for entities A to D and all other entities. Further, at the ninety-five percent level of confidence, significant differences were found between entity F and all other entities except entities H & J. The results indicate that RA&As perceive a need for differential corporate reporting requirements in respect of the requirements of AC 126 particularly where there is a limited financial statement user base. This finding is contrary to ED 163 that does not propose any exemptions from the requirements of AC 126. However, this result supports the current multi-tiered company proposals of the South African Department of Trade and Industry (DTI,2004), the thresholds for and reporting requirements of which, are currently being investigated by the SAICA (SAICA,2004d).
6.6.4 Consolidated financial statements
The aggregate responses presented in table 6-10 indicate that the majority of respondents perceive consolidated financial statements not to be appropriate for all close corporations and all private companies with a limited user base.
The results of the chi-square tests performed found that at the ninety-five percent level of confidence, there are significant differences between responses for securities exchange listed companies and all other entities.
Chi-square tests for significant differences, at the ninety-five percent level of confidence, in the range of entity C to entity L find significant differences in respect of: (i) entity size, except in respect of public companies, for which respondents strongly perceived a need for consolidated financial statements, and close corporations with a narrow financial statement user base, for which respondents strongly did not perceive a need for consolidated financial statements, (ii) user base, and (iii) entity form, except with respect to the smallest of entities with a narrow user base, for which respondents strongly did not perceive a need for consolidated financial statements.
The results indicate that RA&As strongly perceive a need for differential corporate reporting requirements in respect of the requirement to prepare consolidated financial statements based on entity size, financial statement user base, and entity form. This finding supports the current multi-tiered company proposals of the South African Department of Trade and Industry (DTI,2004), the thresholds for and reporting requirements of which, are currently being investigated by the SAICA (SAICA,2004d).