2006 20-F - Sappi

SAPPI
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued)
for the year ended September 2006
35. SUMMARY OF DIFFERENCES BETWEEN INTERNATIONAL FINANCIAL REPORTING
STANDARDS AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The group’s accounts are prepared in accordance with International Financial Reporting Standards,
which differs in certain material respects from United States GAAP. These differences relate principally to
the following items, and the effects on net profit and shareholders’ equity are shown in the
following tables.
a. Pension programs and
post-retirement
medical benefits
1. Transitional rules for
initial applications
2. Recognition of
pension asset
International Financial Reporting Standards (IFRS) United States GAAP (US GAAP)
On adoption of the revised IFRS standard,
IFRS requires the post-employment obligation
or asset to be recognised immediately.
In 2002, a pension asset was recognised for the
Southern African defined benefit pension
scheme as detailed below for IFRS and
United States GAAP:
Post-employment benefit assets can only be
recognised to the extent that the asset will lead
to a reduction in future payments or a cash
refund. The reduction in this asset is reflected
in the Statement of Recognised Income and
Expenses.
F-101
Upon the first time
adoption of US GAAP in
1996, the group had to
amortise on a straight line
basis the original
obligation over a number
of years equal to the
difference between: (a) the
period from the effective
date of the relevant US
accounting standards to
1996; and (b) 15 years.
Subsequent changes in the
obligation or assets after
initial adoption are
recognised in the year in
which the change occurs.
No such limitation exists
under US GAAP.