Abstract
M.Com. (International Accounting)
The securities lending market has become significant in South Africa as noted in Figure 2.3 below. Because of the complexity of securities lending transactions, regulatory bodies such as the South African Securities Lending Association (SASLA) have been established in South Africa and across the world. As an observation, the regulatory requirements in the securities lending industry are more focused on the structure of the transactions. Financial reporting requirement is not a specific mandate of such bodies and is not one of their objectives. No study has been conducted to confirm whether securities lending transactions are disclosed appropriately in the annual reports of SASLA members. Therefore, a study has to be conducted to evaluate the disclosures of securities lending transactions in the annual reports of SASLA members, to assess compliance with financial reporting disclosures.
The purpose of this limited scope dissertation is twofold:
To examine the level of compliance with International Financial Reporting Standards (IFRS 7) by listed companies who members of SASLA in South Africa. The limited scope dissertation was further confined to the disclosures of securities lending transactions.
To asses the quality of the IFRS 7 disclosures provided by listed companies who members SASLA members in South Africa.
Firstly, compliance with IFRS 7 was assessed using a self-constructed IFRS 7 compliance checklist, referred to as the “mandatory disclosure index” (MDI) which had seven (7) disclosure requirements. Secondly, the quality of the disclosures were assessed using a scoring scale of 0 to 3. The categories are explained in Table 3.1. The population consisted of all entities that are members of the SASLA for the 2015 financial period. A sample of twelve (12) entities was selected.
The results indicate that all listed SASLA members are complying with IFRS 7 disclosure requirement on securities lending and repurchase agreement transactions. From the twelve (12) selected entities, all entities scored 100 per cent on compliance and all are following good practice. The results also noted that the quality of the IFRS...