Practical Implementation

FET Colleges: First Time Adoption of GRAP

November 28, 2019

[wp_social_sharing social_options='facebook,linkedin']

TVET Colleges’ Accounting Framework conversion from SA GAAP to GRAP

As a result of the withdrawal of the standards of GAAP as from 1 December 2012, public Technical & Vocational Education and Training (TVET) colleges (previously known as Further Education and Training Colleges – FET Colleges) will in future have to use a different accounting framework. It is probable that this framework will be the standards of Generally Recognised Accounting Practice (GRAP).   The Accounting Standards Board (ASB) has issued ED 115 in this regard. This ED proposes that TVET colleges should apply GAAP for the period 1 January 2013 to 31 December 2013 and that they should apply GRAP from 1 January 2014.

What are the Standards of GRAP?

The Standards of GRAP is the prescribed accounting reporting framework for the majority of entities in the South African public sector. These Standards are set by the Accounting Standards Board (ASB). GRAP is based on the International Public Sector Accounting Standards (IPSAS) which are the public sector equivalent of the International Accounting Standards (IAS) / International Financial Reporting Standards (IFRS).

The pervasive impact of full GRAP compliance?

The pervasive effect of the application of the Standards of Generally Recognised Accounting Practice (GRAP), on the deliverables of any finance department, is far greater than just the preparation of GRAP compliant Annual Financial Statements.  The effect of GRAP compliance also has a fundamental impact on the entity’s Asset Register, Budget, Standard Chart of Accounts, and on training and capacity development of both finance and non-finance staff.

As GRAP is being phased in as the applicable accounting reporting framework for the South African public sector by the Accounting Standards Board, public TVETcolleges need to be prepared for this transition.  Following the approval by the Minister and the Department of Higher Education and Training (DHET), Public TEVT Colleges are required to comply with GRAP as from 1 January 2014.

What are typical GRAP implementation challenges?

  • General retrospective restatement: The adoption of the Standards of GRAP will result in the required accounting treatment as if GRAP has always been applied. The implication of this is the retrospective restatement of transactions, balances and disclosures included in the current Annual Financial Statements.
  • Specific GRAP application issues: The GAAP standards do not always sufficiently address the recognition, measurement and disclosure of public sector-specific transactions and events and this fact will require specific consideration when applying GRAP for the first time. There are a number of instances where the GAAP and GRAP standards differ significantly regarding accounting treatment measurement and disclosure, e.g. the accounting treatment of government grants and subsidies (conditional and unconditional), employee benefits, heritage assets, financial instruments and transfer of functions and mergers, etc..
  • Unresolved accounting and control issues: The unbundling and correction of incomplete and inaccurate moveable and immovable asset/ loan/ lease /grant registers and other similar internal control deficiencies will have to be addressed to ensure fair presentation in GRAP compliant financial statements.

The impact of GRAP on the deliverables of a TVET’s Finance Department

From our experience in assisting public sector entities with compliance to GRAP, as well as with services related to financial management, accounting and reporting, and governance functions, we would deem AFS, Asset Registers, Budgeting, Standard Chart of Accounts (SCOA), and training and capacity development, as the top 5 areas which are critical for GRAP compliance:

Ducharme Consulting’s successful assistance with GRAP implementation for over the past decade has proven invaluable in delivering practical accounting solutions to the National Treasury, departments, legislatures, provincial treasuries, municipalities, Schedule  3A and 3C entities, trading entities and also TVETcolleges. DC has recently been appointed by the East Cape Midlands FET College and also by the Northern Cape Rural FET College to assist them with preparing GRAP compliant AFS and asset registers for the year ending 31 December 2014. Make sure that you don’t miss out on the opportunity to also secure our value-added services.

The solution to overcoming the challenges posed by GRAP conversion

It is imperative that public TVET colleges become aware of the requirements of GRAP, how these requirements differ from GAAP and what needs to be changed to ensure successful implementation of GRAP. Ducharme Consulting can help you, just like the other 100 plus public sector entities we have successfully assisted with GRAP implementation in the past, by:

  • ASSESS:  Onsite GRAP Readiness Assessment to determine your GRAP compliance:
    This assessment will indicate where the TVET currently deviates from the GRAP requirements. This includes an assessment of financial reporting (GRAP compliant Annual Financial Statements, Standard Chart of Accounts, previous audit report findings), asset-related matters (GRAP compliant asset registers), Budget and budget information included in the AFS, GRAP impact on accounting policies,)
  • ACCOUNT:  Report on the assessment findings as set out in a tailored GRAP Implementation Plan: This provides the details on HOW TO make the necessary changes to comply with the requirements of GRAP. The implementation plan will assist in the successful conversion from the standards of GAAP to the Standards of GRAP.
  • ASSIST: Facilitation and workshop of the GRAP Implementation plan and provision of high-level training: The facilitation and workshop of the GRAP Implementation plan with senior management (for planning, management and oversight purposes) and the provision of high-level training on the requirements of GRAP to all relevant stakeholders (for capacity building and practical application and execution by the administrative & finance team). Ducharme Training Institute will assist in the facilitation of the workshop and training, providing the legislative and theoretical requirements in a hands-on and practical manner.

Brochure on Ducharme TVET College support

Ducharme can assist and support TVET Colleges with the pre-implementation, implementation and the post-implementation phases pertaining to the first-time adoption of GRAP and compliance. Follow the PDF link below for more information and support contact details.

GRAP Readiness Assessments GRAP support & application GRAP training & capacity building
Post-Implementation / Continuous development
GRAP Gap analysis and GRAP implementation plans pertaining to:

  • Annual Financial Statements
  • Fixed Asset Registers
  • AFS & Fixed Asset Register preparation
  • Asset verification & valuations
  • GRAP Compliant AFS templates & automated tools
  • AFS Quality review
  • Audit file preparation
  • Audit processes
  • GRAP AFS requirement training
  • AFS compilation training
  • Training on the impact and managing the external audit process
  • Asset management and accounting training
  • Governance aspects
Download PDF