IFRS - there's nowhere to hide - Grant Thornton

Volume 2. November 2005
In this issue
1. IFRS - there's nowhere to hide
2. the Guestline: To audit or not to audit
3 2©
3. B E - how does it all add up
4. Tax implications of selling your business
5. Occupational health & safety is a risk factor
6. the Chat line
IFRS - there's nowhere to hide
By Jeanette Hern, Partner, Johannesburg
assisted by Gershon Hurwitz
International Financial Reporting Standards (IFRS) have been compulsory for
companies listed on the JSE for accounting periods commencing on or after
1 January 2005. For the reasons set out below, we also recommend that nonlisted
entities adopt IFRS during their first accounting period after this date.
Companies need to manage their first application of the new standards
carefully, particularly as the adoption of certain standards could lead to
volatility in reported earnings and other key performance criteria.
This article will assist you in deciphering the alphabet soup of standards
and translate them into the real meaning they have for your business.
IFRS and IAS
In 2001 the International Accounting Standards Board
(IASB) replaced the International Accounting Standards
Committee. The main objective of the IASB is to
improve the existing international standards and
harmonise various international accounting frameworks.
On its inception, the IASB adopted the existing
International Accounting Standards (IAS) issued by its
predecessor and kept the names and numbers of the
existing statements.
These standards are known as IASs.
An “improvements project” was then initiated to reduce
or eliminate alternatives, redundancies and conflicts
within the Standards in order to deal with some
convergence issues and to make other improvements. As
part of this project, fifteen IASs were improved and two
were revised. There are now approximately thirty IAS
statements which are still in force.
Any new standards issued by the IASB are referred to as
International Financial Reporting Standards (IFRS).
Since its inception, the IASB has released seven IFRS
standards.
Jeanette Hern

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Volume 2. November 2005
The sheer volume of the various standards can make implementing
IFRS a daunting task in any entity, particularly where management
are not familiar with the new IFRS implications. To assist you in
understanding the standard conversions a little better, we have
enclosed a handy reference card for you.
AC statements and South African GAAP
Should you adopt IFRS
What most people don't realise is that, as a result of the
All listed companies and public reporting institutions are required
harmonisation process undertaken by the South African Institute to adopt IFRS with effect from 1 January 2005. Other entities
of Chartered Accountants (SAICA) over the years, our South may choose to either convert IFRS or to remain on SA GAAP. So
African statements were already closely aligned to the IASs. Thus, what should these other entities do
many of the transitional changes and implications envisaged by
the IASB in other countries are not applicable to South Africa. Convert to IFRS: On conversion to IFRS the entity will have to
make an explicit and unreserved statement that it has now
At the time of the “improvements project” in March 2004, SAICA converted to IFRS and it can then apply IFRS 1. This allows
made the South African aligned AC statements the same as the certain exemptions that make it easier to handle the effect of the
amended IASs and the new IFRSs. Thus, all old AC statements implementation on prior year balances.
have been improved (in accordance with the improvements
project), revised (in addition to the improvements project) or Remain on SA GAAP: An unlisted entity may choose to continue
aligned (to align the text thereof with the equivalent international to prepare its financial statements in terms of SA GAAP. As SA
statement).
GAAP has been aligned with international standards the entity
will, in effect, still have to implement the same accounting policies
All new IFRS statements are now issued as South African
as under IFRS. The implementation exemptions allowed by IFRS
statements without any amendments with a dual AC number (e.g. 1 will however, not be available to the entity and all changes will
IFRS3 was issued in South Africa as AC 140).
have to be made retrospectively. We therefore encourage our
clients to convert to IFRS.
It is the practice of the various accounting bodies to issue
interpretations which provide further guidance and clarity to
existing standards. In South Africa, these have been issued by
What is the likely impact of the new standards
SAICA within the AC 400 category. The historical international To bring an entity's accounting policies either in line with IFRS or
equivalents were known as SICs. Under the new IASB,
the newly aligned South African Standards (which, as set out
interpretations are now known as IFRICs.
above, are identical to IFRS with the exception of IFRS 1), a
company needs to perform a detailed review of existing
As part of the improvements project, many existing SICs were accounting policies. Experience has shown that the following
incorporated into the actual body of the standards and have thus areas require the most attention:
now fallen away. There are currently eleven SICs and four IFRICs.
These interpretations have the same force as the related property plant and equipment
accounting standards. introduction of component accounting
reassessment of useful lives and expected residual values
Statements in the AC 500 series are issued to address South
annually
African specific matters which are not addressed in the goodwill is assessed for impairment and no longer amortised
international standards. AC 501 - Secondary Taxation on accounting for share options and the recognition of the related
Companies - is currently the only standard issued in this series.
expense and liability in terms of IFRS2
the requirements of IFRS 3 to allocate the purchase price in
Re-looking at existing standards
any business combinations after 1 March 2004 to the fair
The increased focus on the content of the existing standards
values of the underlying identifiable assets tangible and
during the current year has identified various areas where South intangible, liabilities and contingent liabilities.
African companies were incorrectly applying these standards. The financial instruments
accounting profession is, therefore, currently experiencing a the removal of alternative accounting treatments for foreign
refinement of opinions on paragraphs in the standards. Even
operations.
though the wording of the standards has not changed, the opinion reclassifying non-current assets held for sale.
of what they mean has changed. An example of this is the wider related party definitions and disclosure requirements.
requirement to recognise operating lease income or expenditure
on a straight-line basis over the period of the lease.
The Grant Thornton IFRS implementation team:
Frank Timmins ftimmins@gt.co.za Jeanette Hern jhern@gt.co.za Jessica Saayman jsaayman@gt.co.za
Chris Paul cpaul@gt.co.za Stephen Bruce sbruce@gtec.co.za Rudi Scholtz rscholltz@gtec.co.za
Neil Adams nadams@gtct.co.za Catherine Tillard ctillard@gtdbn.co.za Anabel Vieira av@gtpta.co.za

Volume 2. November 2005 3
the
Guest
line: To audit or not to audit
By Linda de Beer, Senior Executive - Standards, South
African Institute of Chartered Accountants (SAICA)
Significant debate surrounds the nation's proposed corporate law
reform, with the following questions being anxiously posed:
should all companies be subjected to an audit
do smaller companies only need an accounting officer's report
should close corporations be abolished
must every company comply with International Financial
Reporting Standards (IFRS) including small companies
Yet the debate has not addressed the heart of the matter, thereby
rendering it impossible to come up with the appropriate answers.
Corporate law - limited liability
Of crucial importance is an appreciation of a vital principle of
corporate law, that of limited liability which comes with
extended responsibility. The shareholders or members of a
limited liability entity (company or close corporation) have the
privilege of decision-making, acting and running operations for
which they, in their individual capacity, only take limited
responsibility, albeit financial or otherwise.
For this privilege, the limited liability entity must 'pay' by making
information available to its stakeholders in a responsible,
transparent and unbiased manner.
The Triple Bottomline
Gone are the days when a company or close corporation could
think it was only accountable to its shareholders or members.
No company is an island; it is part of a complex infrastructure
and, as a corporate citizen, it is accountable to the community,
employees and others.
Good governance requires a balance between economic,
environmental and social interests, often referred to as the triple
bottom line.
Public protection
With this in mind, the broad objectives of corporate law can be
evaluated and only then can all of the related questions be
answered.
The first such objective refers to protection for investors and
other stakeholders. As an economy dependent upon foreign
investment, South African corporate law should give all investors
the peace of mind that financial reporting standards of the highest
quality are applicable.
South African corporate law should be in line with international
best practice and the requirements should be familiar and
understandable for a prospective foreign investor.
Furthermore, mechanisms should be built into law to ensure that
external stakeholders such as shareholders, minorities, employees,
creditors, suppliers, consumers and the public at large are
protected. This can be done by spelling out the duties and
obligations of directors, financial reporting requirements, good
governance principles, civil litigation processes and capital
maintenance mechanisms.
Impact on smaller businesses
The objective of public protection must be balanced by the
importance of small business within our economy. If South
African corporate law does not encourage entrepreneurs to
establish small and medium sized businesses, our socio-economic
problems such as the need for job creation and skills development
will never be adequately addressed.
HÄGAR the Horrible by Dik Browne

4
Volume 2. November 2005
Selling a business
Have you considered the tax implications
Corporate law should therefore be simple, accessible and not
impede the activities of the small business sector.
Even the less sophisticated businessman should be empowered
to establish a company in a fairly simple and inexpensive
manner, without having to go through unnecessary red tape,
onerous reporting requirements and cumbersome registration
processes.
These are the two objectives on which we should hang our
corporate law hat. Once this is in place, it becomes easy to
answer the questions. Thus:
Should all companies be subjected to an audit
Not necessarily, but if stakeholders require an audit, they should
have the option to have one done. If the public interest is at
stake (that is, external stakeholders are involved), an audit is a
must.
Do smaller companies only need an accounting officer's
report
Only if an accounting officer's report adds value; if not, don't
even do that. However, again, if public interest is at stake or
stakeholders require assurance, an accounting officer's report
will not be enough; an audit must be done.
Should close corporations be abolished
The question should, rather, be: Does the Close Corporations Act
meet its defined objectives, or is it complicating the issue; what is the
difference between a close corporation and a private company
If this difference is purely arbitrary and superficial, the Close
Corporation Act is an obstacle rather than an aid, and should be
abolished.
By Justin Liebenberg, Senior Tax Manager, Johannesburg
The radical changes in tax legislation over the past couple of years
have had an impact on traditionally straightforward business
transactions. In the past you could have sold a business with
relatively minor tax consequences but today, by ignoring the impact
of Capital Gains Tax (CGT) and amendments to the Secondary Tax
on Companies (STC) the effect of legislation on these transactions
can be costly.
In this article we highlight some of the pitfalls when selling your
business, focusing specifically on the different tax consequences
between selling the shares in a company and selling the business
of a company.
The use of a case study will best demonstrate the issues. For
this purpose, assume the following facts:
you own shares in the company, which were valued at
R10m on 1 October 2001 (the commencement date of
CGT)
the purchaser is willing to pay a purchase
price of R20m
the net asset value of the business is
R5m at 1 October 2001
the net asset value at date of sale is
unchanged at R5m
the goodwill at 1 October 2001 is
valued at R5m
(R10m - R5m)
the goodwill at the date of
sale is R15m (R20m - R5m)
Must every company comply with International Financial
Reporting Standards (IFRS) including small companies
Yes if it enhances the credibility of our market. But no for
small companies that do not operate at a higher, public interest
level where IFRS is an operational obstacle.
Ultimately, public interest should dictate. In this context, the
notion of a public interest company is important.
Public interest companies should be subjected to the highest
standards, including accounting, auditing and corporate
governance, reporting requirements and other checks and
balances.
The challenge however, is to accurately set the parameters so
that the appropriate companies with external public interest are
included in this definition.
Justin Liebenberg

Volume 2. November 2005 5
Tax implications if you sell your shares in the business
The sale of a share amounts to the disposal of an asset and is
consequently subject to CGT. Essentially, a capital gain or loss is
determined by deducting the base cost of an asset from the
proceeds realised on its disposal. Most CGT planning revolves
around minimising your capital gains by maximising your base
cost. The base cost of an asset would normally be enhanced by
certain expenditure incurred in relation to the asset (the types of
expenditure are specifically provided for in the legislation).
CGT only became effective from 1 October 2001 and therefore
special rules apply to the determination of the base cost of an
asset acquired before this date so as to ensure that only post 1
October 2001 growth is subject to CGT. The effect of these rules
is that the value of the asset had to be determined at 1 October
2001, the so-called 'valuation date value'. This value is included in
the asset's base cost together with any allowable expenditure
incurred after 1 October. The base cost can therefore be
maximised by ensuring the highest possible valuation date value is
applied and that all allowable expenditure after valuation date is
included in the base cost.
The legislation essentially allows for different methods of
calculating your valuation date value:
the time apportionment base cost (TABC) method, (which
effectively apportions the gain between the period before and
after 1 October 2001 on a time basis)
20% of proceeds;
the market value at valuation date
The determination of the valuation date value is not as simple as
it appears - there are some complex rules that apply to limit
capital losses by determining what valuation date value is used.
The first step to take in maximising your base cost is (where the
option is available) to determine which method will provide you
with the highest valuation date value.
If the market value is the best method, then keep in mind that
this method can only be applied where you have determined such
value before 30 September 2004. In addition, if the total value of
your shares exceeded R10m then a valuation certificate (in the
form prescribed by SARS) has to be submitted with your first tax
return submitted after 30 September 2004.
As previously mentioned, the base cost of your shares will consist
of the valuation date value as well as certain expenditure incurred
in respect of the shares after 1 October 2001. The following
types of expenditure can be included in the base cost of your
shares (thereby limiting the tax payable):
expenditure actually incurred in respect of the valuation of
the asset for purpose of determining the capital gain or
capital loss in respect of the asset
expenditure actually incurred that directly relates to the
disposal of the asset including:
remuneration paid to your accountant or legal adviser for
services rendered
stamp duty arising from the transfer of the shares
any expenditure that may have been incurred in maintaining
or defending your legal rights to the shares
A further important planning aspect to keep in mind is that you
will need to maintain proper records providing evidence of the
amounts that you wish to include in your base cost. Therefore
you should ensure that you safeguard any valuations that you
performed as at 1 October 2001 as well as any invoices, etc which
serve as proof of other costs incurred that can be taken into
account in the determination of the base cost.
The effective rate at which the CGT will be taxed in your hands,
as an individual, is 10%. Therefore, assuming that the market
value gives the highest valuation date value, your gain would be
R20m - R10m = R10m and (assuming other expenditure incurred
in respect of the shares are ignored) your CGT liability will be
R1m.
If the shares in our example are sold, the tax liability is calculated
as follows:
R
Proceeds 20 000 000.00
Base cost (10 000 000.00)
Capital gain 10 000 000.00
Less individual's annual exclusion (10 000.00)
9 990 000.00
Portion included in taxable income (25%) 2 497 500.00
Taxed at 40% 999 000.00
Consequences if you sell the business
The sale of a business, as opposed to the sale of the shares, has
tax implications at both the company level and shareholder level.
At the company level, there are two main types of tax arising on
the sale of the shares, CGT and STC.

6 Volume 2. November 2005
Although not specifically mentioned, don't forget that there are some exclusions
from CGT where business assets are disposed of by natural persons.
CGT implications
The portion subject to STC will be the difference between the
The sale of a business implies the sale of a group of assets and proceeds arising from the disposal of capital assets and their
liabilities comprising the business. To the extent that a business is market value at 1 October 2001.Unlike the CGT provisions there
worth more than its net assets, an intangible asset in the form of is no requirement that this valuation must be done prior to 30
goodwill arises. (For the purpose of this illustration we will
September 2004 or that any valuation had to have been
assume that the assets other than goodwill are sold at cost and submitted. From a tax-planning perspective it may be worthwhile
therefore no gain or loss is realised on these assets).
to value the assets now as, the further you get from the valuation
date, the more difficult it is to source accurate data on which to
The disposal of goodwill amounts to the disposal of an asset and base a valuation.
is also subject to Capital Gains Tax. Once again, from a tax
planning perspective, maximising the base cost of goodwill
reduces your capital gain.
Avoiding additional STC
In addition, to ensure that at least the pre 1 October 2001 capital
There are some pitfalls surrounding the determination of the growth is not subject to STC, steps need to be taken to have the
valuation date value of goodwill. It is SARS' view that the Time company liquidated or deregistered within 6 months (the Income
Apportionment Base Cost (TABC) method is not available for Tax Act prescribes these steps).
determining the base cost of goodwill (although, in our view, this
is debatable). Because goodwill is an intangible asset, a valuation Assuming that the business is sold the calculation of the tax
certificate needs to be submitted if its value thereof at valuation liability will be as follows:
date exceeds R1m (not R10m as is the case of tangible assets).
Remember that a business is not considered to be a separate asset
for CGT purposes and therefore the valuation of the business as
a whole may be inadequate. Because the taxpayer in this case is
the company, the capital gain will be taxed at an effective rate of
14.5% (as opposed to 10% in the case of a natural person).
Proceeds on sale of goodwill *
Base cost on sale of goodwill
Capital gain
Portion included in taxable income (50%)
Taxed at 29%
R
15 000 000.00
(5 000 000.00)
10 000 000.00
5 000 000.00
1 450 000.00
STC implications
* remember the other assets are sold at their base so no CGT arises. If the
Generally, STC is imposed on the net dividend declared by a
company at a rate of 12.5%. Therefore, assuming that the
company has no revenue reserves at the date of sale and the full
proceeds arising from the sale of the business are distributed to
shareholders, the full amount will be subject to STC at a rate of
12.5%.
In the past it was possible for a company to distribute capital
profits STC free if the distribution was made in the course of, or
in anticipation of, the liquidation or deregistration of the
company. With the introduction of CGT, only that portion of
the capital profits that represent capital growth that occurred
prior to valuation date will be exempt from STC under these
circumstances (i.e. liquidation or deregistration).
company subsequently deregisters/liquidates STC:
R
Total capital profit subject to STC 10 000 000.00
Less CGT paid (1 450 000.00)
Capital profits available for distribution 8 550 000.00
STC @12.5% 1 068 750.00
Total tax (CGT&STC) 2 518 750.00
There are some important actions that can be taken to limit the
CGT and STC costs of selling your business. For the reasons set
out above it is generally always better to sell your shares rather
than the business (the difference in our example is R1 519 750).
These costs should be considered when negotiating with a
potential purchaser.

Volume 2. November 2005
7
3 2©
B E - how does it all add up
By Lee-Anne Bac, Director, Grant Thornton Strategic
Solutions, Johannesburg & Marc Edelberg, Partner,
Cape Town
Grant Thornton's annual International Business Owners Survey
(IBOS) indicates that Black Economic Empowerment (BEE) is one of
the biggest issues keeping owners of medium sized businesses
employing between 50 and 250 people awake at night - a trend that is
definitely on the rise. In fact, 61% of business owners believe that
BEE is a key issue for them in winning business, up from 51% in
2003.
3 2©
BEE vs B E
Throughout South Africa there is a lot of confusion about the
3 2©
difference between BEE and B E .
Essentially BEE refers to a narrow form of empowerment,
focused primarily on ownership, where more than 50% of an
enterprise's equity is managed and controlled by a black person
or group.
3 2©
B E goes beyond just ownership (with a target of 25%) and
encourages the economic empowerment of all black people
through integrated socio-economic strategies incorporating
3 2©
human resources and skills development. B E requires equitable
representation in all occupational categories and levels in the
workforce and beyond.
Interestingly, during the focus group research conducted for
IBOS it was determined that although BEE is a business
imperative, many of these medium sized businesses are grappling
with the issue of how best to implement Broad Based Black
3 2©
Economic Empowerment (B E ) in their organisation.
Charters vs codes
In particular business owners are confused by:
3 2©
the range and extent of the various B E charters that are 3 2©
To date, around 29 different industry sector B E charters have
impacting on their businesses
been finalised or are in the pipeline. These charters outline
the range, extent and complexity of the forms that they have
3 2©
specific B E targets that organisations within that sector should
to complete for their clients or for tenders
achieve by a certain date. While none of these charters have been
the inconsistencies in interpretation of terms, data and
gazetted as Sector Codes, they have been endorsed by the sector
requirements in different charters and by rating agencies and
and in some cases are referred to in various Acts of legislation.
consultants
the perception that there is a need to “give away shares in
3 2©
Over and above these B E charters, the
their business”
3 2©
Department of Trade and Industry (DTI)
the fact that government is punting B E but tender and
has released a draft of the Codes of
procurement documents focus on BEE ownership only,
3 2©
Good Practice for B E . These
driven in some cases by charters 3 2©
codes set out what B E is and
how it should be measured. A
Background
generic scorecard has been
developed that embodies the
In the early 1990's businesses embarked upon a number of
principles and stated objectives
initiatives to incorporate BEE, primarily through equity
of the act and is applicable to
partnerships. In many instances, the parties were accused of
all industry sectors.
fronting and tokenism as these partnerships appeared to lack real
substance. This resulted in a formalised government strategy
through the Broad Based Black Economic Empowerment Act of
2003.
The Government Gazette states the main objectives of
3 2©
this Act are to facilitate B E by promoting
economic transformation in order to enable
meaningful participation of black people in the
economy, to achieve a substantial change in the
racial composition of ownership, management
structures and in the skilled occupations of
existing and new enterprises.
In the future, sector charters will remain a mission
statement until the charter is gazetted as a Sector
Code. Until such time, the Codes of Good Practice
will outweigh the industry charter in terms of the
application scorecard.
Marc Edelberg

8
Volume 2. November 2005
3 2©
It is possible to attain sufficient B E status
without losing control over your business.
The scorecard has been divided into three core
components namely,
direct empowerment
human resources development
indirect empowerment
These are further divided into BEE elements,
each of which is weighted as detailed alongside.
Core Component BEE Element Weighting
Direct
empowerment
Human
resource
development
• Ownership
• Management
• Employment equity
• Skills development
30%
30%
Guidelines
DTI currently setting out
measurement criteria
Not yet been issued
by DTI (anticipated
November 2005)
Indirect
development
• Preferential procurement
• Enterprise development
• Residual element
40%
Not yet been issued
by DTI (anticipated
November 2005)
BEE ratings
Currently there are guidelines setting out measurement
criteria for only the direct empowerment portion of the
scorecard. These guidelines were also recently revised.
At the time of writing this article, the guidelines dealing
with the other two areas had not yet been issued by the
DTI. It was anticipated that these guidelines would be
released during November 2005 but thus far, we have
not seen anything.
The draft Codes have generated significant debate
and comment from the interested and affected
stakeholders. In general, the Codes provide
significant variation from the targets, terms
and definitions of the various Charters in
existence.
Must all businesses comply with
BEE
No business is required by law to
be BEE compliant. However, if you
are currently doing business, or
planning to do business with a
government department, local
authority or municipality, non-compliance
could affect your business especially in
relation to preferential procurement. These
bodies will ask about your transformation
or BEE status and if it is not rated highly
enough, they are required to find an
alternate supplier.
Ratings provide an independent assessment of a
company's empowerment status, risks and
opportunities but when it comes to obtaining a rating,
caution needs to be exercised.
Rating agencies are currently providing ratings based
on their own interpretation of the generic scorecard.
This is resulting in a variance on scores for companies
with very similar statuses which, in turn, is causing
confusion in the market.
3 2©
When the DTI release the official guidelines for B E ,
all businesses who already have a rating will have to be
re-rated as the criteria initially employed by the rating
agency will more than likely be out of line with the
final DTI requirements.
It is important to note that acquiring a rating is not a
once off initiative and needs to be conducted annually.
Because a business is dynamic, with a range of internal
factors regularly changing, a rating certificate is only
valid for a period of twelve months.
3 2©
B E - the right thing to do
Until all of the elements within the Codes of Good
3 2©
Practice have been finalised, B E remains a moving
3 2©
target for business owners. True B E is not
something that is going to be achieved over night. The
3 2©
important thing to remember, however, is that B E is
the right thing to do, regardless of whether you are
looking for economic or ethical benefits.
Lee-Anne Bac
Grant Thornton consultants have a keen understanding of the
Sector Codes and Charters. Through comprehensive analysis,
3 2©
we can provide you with strategic B E solutions that work for
your company. For further information, please contact us.

Volume 2. November 2005
9
Occupational health & safety is a risk factor
Non-compliance will result in severe penalties
By Anton Barnard, Director, Business Risk Service,
Johannesburg
With good corporate governance requiring enhanced accountability
and transparency from directors, occupational health and safety has
come to the fore as a key factor of triple bottom line reporting.
In South Africa, occupational health and safety is also receiving a lot
of attention from the Department of Labour and failure to adhere to
the Act could result in severe penalties, including hefty fines and jail
sentences for business owners.
Occupational health and safety is fast becoming one of the
greatest risks for business, not only from a financial point of
view but also in terms of good governance and organisational
reputation.
The Occupational Health and Safety Act (1993) states that an
actual person, as opposed to the organisation, will be responsible
for the implementation of the Act as well as taking
accountability for any legal activity relating to the Act. This
responsibility falls on the owner of the business and in the case
of listed entities, the CEO. If any business is found to be in
contravention of the Act, that person will face criminal
prosecution and could be fined up to R50 000 or 12 months in
prison. In terms of King II, no person with a criminal record
can be a director of a business.
In addition, non-compliance could result in the business having
to close until it is deemed to be compliant and the business will
have to foot the bill for any resulting health and safety
investigations.
Non-compliance could be incredibly costly for any business and
the state will no longer accept ignorance of the Act as an excuse
for non-conformity.
Easy implementation
Misinterpretation of the Act is one of the biggest hurdles faced
by businesses but by following these steps for implementing a
formal health and safety strategy, you can rest assured that if
investigated by the state, you will meet their occupational health
and safety requirements.
Step 1: Structures of defined roles and accountability
Although the executive has to accept accountability for his
responsibilities towards health and safety, it is understood that
he is a busy individual and may delegate the implementation and
management to other members of the organisation.
That being said, the buck still stops at the top and the executive
needs to ensure that his business's health and safety strategy is
clearly defined with a clear reporting framework and, on a
regular basis, assess the status of compliance to the
Occupational Health And Safety Act requirements
Part of the reporting framework must include a safety manager
whose responsibility would include:
developing, implementing and maintaining the safety, health
environment and risk program for the whole organisation
ensuring that the organisation complies with all relevant
legislation
making recommendations to management to eliminate,
reduce, transfer and/or accept the identified risks
performing risk assessments to determine the level of
exposure to the whole organisation
liaising with the relevant outside organisations with regards
to safety, health, environment and risk related matters
ensuring that all employees are aware of the rules regarding
safety, health, environment and risk related matters
ensuring that all incidents/accidents are reported to and
investigated by the relevant authorities
In addition, a safety committee is often recommended for larger
organisations. This committee would:
make recommendations to management concerning safety,
health, environment and risk related matters
discuss all incidents and/or accidents and make
recommendations to management to prevent future such
occurrences
give management feedback on the safety, health,
environment and risk progress of the organisation
ensure that all safety, health, environment and risk related
matters concerning the risk program are attended to on a
regular basis
Triple bottom line reporting has gained favour since the introduction of the King II Report (2002) on corporate governance.
Triple bottom line reporting requires that businesses report to all their stakeholders (i.e. more than just their shareholders)
on more than just their financial results. There is now a need to report on their ongoing sustainability as an organisation in
terms of environmental responsibilities as well as their interpretation of and response to social responsibility.

10 Volume 2. November 2005
"The system should contain a simple yet thorough process that
when reviewed and reported on, should provide confirmation that a
formal health and safety structure is in place."
Depending on the type of workplace other safety responsibilities may
be necessary, such as scaffolding safety, handling and storage of
hazardous substances or managing contractors on site.
Step 2: Assessment
Regardless of the type of working environment, an assessment needs
to take place where any possible risks to health and safety are
identified. These risks could range from anything as simple as smooth
steps in the stairwell to more extreme cases relating to the storage of
hazardous waste or poisonous emissions.
All identified risks need to be documented.
Step 3: Risk management procedures
For every risk identified, a procedure for managing that risk needs to
be put into place. For the more minor risks, their related
management procedures could be as simple as making people
aware of the smooth steps through a sign erected in close
proximity. Of course, more extreme risks would need a
more detailed management plan.
Again, all management procedures need to be
documented.
Step 4: Training
In line with a system of implementation,
compliance and awareness, all staff must be put
through induction training. This type of
awareness training must deal with the identified
health and safety aspects in the workplace as well
as regulatory requirements.
Legislatively required responsibilities, such as
safety representatives and first-aiders must
formally be trained, certified and retrained at
legally determined intervals set by the law.
Anton Barnard
The systems must involve the workforce at
all levels and provide the necessary assistance
to ensure that potentially hazardous job
related functions are carried out safely and
in accordance with the law. It is essential
that the system provides documented means
to substantiate that the Chief Executive
Officer, in accordance with his assignment,
has taken reasonable action in the event of
litigation as well as the results of that
action.

Volume 2. November 2005
11
Hot off the press…
...some of our latest publications aimed to assist
you in the various aspects of running your business.
A guide to establishing a presence in South Africa…
… is a handy reference outlining the most important facts
to know when investing in South Africa.
The publication provides information on South African
taxation, investment incentives and exchange control and
outlines the requirements for work and residential visa
applications.
A gu i de to es ta bli sh
in g a
presence
i n Sou th Af ric. a ..
Establishing a presence in South Africa also provides the
information necessary for any business wanting to use South
Africa as a springboard into Africa.
The effective director's handbook
Now that corporate governance is a business imperative,
the duties and responsibilities of directors as well as their
associated personal liability have never been greater.
Directors need to possess sound business, legal and financial
skills and the effective directors guide, produced in conjunction
with Edward Nathan, is intended to highlight areas of concern
in all three spheres. Where appropriate, recommendations of
the King II report on corporate governance for South Africa
(2002) have been incorporated.
The guide also includes a series of key questions that directors
may use to determine how effectively they are giving direction to
their companies.
The first Fiscal File update
Our Fiscal File, published jointly with Edward Nathan, outlines
important tax, financial and exchange control information and is
updated as the tax legislation changes. Because the legislation is
a moving target, we now produce the Fiscal File as an A5 ring
binder that allows us to supply replacement updates in looseleaf
format when necessary.
Our first loose-leaf update, which covers legislation
promulgated earlier this year, has been printed. If you received
the original product but have not yet received the update, please
advise Grant Thornton Marketing.
To receive a copy of any of these products, please
contact Nicole Dudley at Grant Thornton Marketing
on (011) 322 4701 or ndudley@gt.co.za

12
Volume 2. November 2005
You are always welcome to
contact us...
chat line
...features exciting developments at our firm.
Grant Thornton International turns 25
Grant Thornton International celebrates 25 years as the
longest same-name international accounting network. This
worldwide umbrella organisation of independent
accounting firms now boasts 91 independent member
firms in 88 countries.
South Africa became a member of the international
network in 1991, whilst still known as Kessel Feinstein.
To celebrate this milestone, twenty-five year old employees
were interviewed on why they joined Grant Thornton. Many were attracted by the
integrity and professionalism of the firms, opportunities for personal and
professional development and the work environment. Here is what Duan Brink,
Assistant Audit Manager, Johannesburg, thinks of the firm:
“The firm affords employees a lot of opportunity for growth, allowing them to
excel in their chosen fields.”
New partner in Durban
Congratulations to Ahmed Timol, who was appointed as
partner in our Durban office in September. Ahmed joined
Grant Thornton as a trainee in 1999 and, on completion
of his articles, was appointed an Audit Supervisor and
then Audit Manager in July 2002.
Ahmed completed his BCom degree at the University of
Natal, in 1991 and obtained his postgraduate diploma in
accounting the following year.
In the Queen's favour
Grant Thornton International's Worldwide CEO, David
McDonnell has been honoured by Queen Elizabeth II as a
Commander of the British Empire (CBE) as part of
her 2005 birthday honours list. These decorations are
awarded to people who have made a distinguished
contribution to the country or community.
David, who has been with Grant Thornton for over
40 years comments, “It is obviously a great honour to
receive the CBE on a personal level and I am
genuinely delighted. However, it must be recognised
that my appointment is a great reflection on the firm
as a whole.”
Fond farewell
The Johannesburg office recently said goodbye to two
partners.
Janys Finn, the first female to have been made
partner left Grant Thornton at the end of September
to join Investec.
Jack Laser, who has been a partner for 18 years retired at the end of October.
Jack will be staying on in a consultative capacity.
Cape Town
Deryck Woolley
The Pinnacle, 5th Floor, Cnr Strand & Burg Street,
Cape Town, 8001
P O Box 1550, Cape Town, 8000
T +27 (0) 21 481 9000
F +27 (0) 21 481 9020
E mail@gtct.co.za
Durban
Tony Berman
2nd Floor, 4 Pencarrow Crescent, Pencarrow Park,
La Lucia Ridge Office Estate, 4019.
P O Box 752, Durban, 4000
T +27 (0) 31 576 5500
F +27 (0) 31 576 5555
E mail@gtdbn.co.za
East London
Tony Balshaw
26 Vincent Road, Vincent, 5247
P O Box 313, East London, 5200
T +27 (0) 43 726 9898
F +27 (0) 43 726 9899
E gtel@gtec.co.za
Johannesburg
Leonard Brehm
137 Daisy Street, Cnr Grayston Drive,
Sandown, 2196
Private Bag X28, Benmore, 2010
T +27 (0) 11 322 4500
F +27 (0) 11 322 4545
E info@gt.co.za
Port Elizabeth
Tony Balshaw
165 Cape Road, Port Elizabeth, 6001
PO Box 35133, Newton Park, 6055
T +27 (0) 41 373 4200
F +27 (0) 41 373 4201
E gtpe@gtec.co.za
Pretoria / Tshwane
Johan Blignaut
121 Boshoff Street,
New Muckleneuk, 0181
P O Box 1470, Pretoria, 0001
T +27 (0) 12 346 1430
F +27 (0) 12 346 2502
E gtpta@gtpta.co.za
Media enquiries...
Jennifer Kann
T +27 (0) 11 322 4588
E jkann@gt.co.za
Editorial Panel: Leonard Brehm, National Chairman;
Pamela Grayman, National Marketing Principal;
Jennifer Kann, Communications Manager;
David Reuben, Partner
Auditors, Accountants & Business Advisers
South African member of Grant Thornton International
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Namibia, Tanzania, Uganda and Zambia
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