by Kyra South, Associate
Reviewed by Natalie Scott, Director

1. Background
   
   Since the outbreak of COVID‑19, and the subsequent national lockdown declared in terms of the Disaster Management Act,^[1] (“National Lockdown“), a number of companies are unsure of how to, inter alia, issue their requisite financial reports. The purpose of the JSE Letter is to inform issuers of the various accounting and/or auditing measures that have been put in place in light of the National Lockdown and COVID‑19 in order to assist issuers in generating the financial reports required by the JSE.
   
   Capitalised terms not defined in this summary shall have the meaning attributed to them in the JSE Letter.

2. JSE requirements
   
   Currently, the JSE requires all financial reports that are to be submitted to it to be in accordance with the International Financial Reporting Standards (“IFRS“). It is the JSE’s belief that if carefully considered, IFRS should provide guidance to issuers on the preparation of, inter alia, financial reports in light of COVID‑19.

3. Taskforce and the central repository of financial reporting related information
   
   3.1 In light of the current unprecedented circumstances, a taskforce called the ‘South‑African COVID‑19 Taskforce’ (“Taskforce“) has been established for the purpose of collating and aligning the activities of all of the financial regulators and the auditing and accounting profession[2]. The terms of reference pertaining to the Taskforce can be found on the Independent Regulatory Board for Auditors’ (“IRBA“) website, and can be accessed here[3].
   
   3.2 The South African Institution of Chartered Accountants (“SAICA“) has set up the “COVID‑19 Hub” of all financial reporting information that has been published during the COVID‑19 pandemic, which can be found on SAICA’s website, and can be accessed here[4] . IRBA has also established a repository of information on its website for all the information published during COVID‑19, which can be accessed here[5]. Both websites offer information for issuers who are required to produce financial reports during the National Lockdown. The JSE (through the JSE Letter) encourages all issuers to keep abreast of any updates that are published on the aforementioned websites.[6]

4. The preparation of financial statements
   
   4.1 In addition to establishing the COVID‑19 Hub, SAICA has identified a number of areas of concern for the Preparers[7] of financial statements and has consequently issued a number of ‘educational documents’ in this regard in order to assist Preparers.
   
   4.2 To date, SAICA has issued the following ‘educational documents’:
   
   4.2.1 “Events after the reporting period (i.e. when is COVID-19 an adjusting/ non adjusting event);
   4.2.2 Going concern considerations in light of COVID-19;
   4.2.3 Disclosure of estimates and judgements (these become even more important during this time);
   4.2.4 Borrowing Costs (or the ongoing capitalisation thereof);
   4.2.5 Revenue from contracts with customers (specifically variable consideration and contract modifications); and
   4.2.6 Onerous contracts (created through the COVID-19 lockdown).”[8]
   
   4.3 We understand that SAICA intends to continue identifying relevant topics and issuing ‘educational documents’ on the identified topics for the foreseeable future.

5. JSE issuer repository

Like SAICA and IRBA, the JSE has also established an ‘Issuer Regulation JSE COVID‑19 Portal’ which is accessible on its website, the purpose of which is to collate all of the letters issued by the JSE on COVID‑19 and to assist issuers with accessing this information.

[1] Act 57 of 2002.

[2] JSE Letter, page 1.

[3] https://www.irba.co.za/upload/COVID%20-%2019%20Task%20Force%20-%20Terms%20of%20Reference.pdf [accessed 02/05/2020 at 13:50].

[4] https://www.accountancysa.org.za/covid-19/saica-resources/covid-19-ifrs/ [accessed on 02/05/2020 at 14:12].

[5] https://www.irba.co.za/guidance-for-ras/general-guidance/covid-19 [accessed 02/05.2020 at 14:10].

[6]JSE Letter, page 3.

[7] JSE Letter, page 1.

[8] JSE Letter, page 2.