Goodwill impairment testing disclosures – South African compliance in 2018

Abstract

This paper reviews compliance with the IAS 36 goodwill impairment testing disclosure requirements by South African entities included in the All Share Index of the Johannesburg Stock Exchange. A detailed extraction of disclosures provided by entities with material levels of goodwill was compared to the key requirements. The approach taken is grounded in an assumption that the diligence with which preparers attend to visible disclosures acts a "litmus test" of the reliability of the invisible workings of the "black box" of impairment testing. The results are analysed through a critical narrative proposing insights relevant to preparers, auditors, regulators, and standard-setters. Consistent with results of studies in other jurisdictions the disclosures of South African entities are often incomplete and inconsistent, presented in a minimalist, generic, "boiler-plate" fashion considered to be of limited use to decision makers assessing the reliability of impairment testing. This is the first known detailed review of South African levels of compliance with goodwill impairment testing disclosure requirements offered as an initial contribution to assessing the reliability of goodwill balances reported by South African corporate entities.

The use of non-financial performance metrics in determining directors’ remuneration: The case of listed companies in South Africa

“…The United States is not an exception to these scandals. South Africa has its own fair share in terms of Tongaat-Hullet Limited, Steinhoff International Holdings N.V, Bosasa Group, and many other corporates (Day, 2020;Rossouw & Styan, 2019).…”

ESG performance measures for executive pay: Delphi inquiry strategy and experts’ opinion

“…The global financial crisis (GFC) and corporate scandals such as Enron and many others that took place all over the world are testament to the problems associated with the sole use of FPMs in determining executive compensation (Day 2020;Edmans 2020). South Africa has not been immune to corporate scandals propagated by greed and myopia among the executives both in the private and public sectors, as illustrated in the recent state capture inquiry.…”