Cost-Benefit Anaylsis

The Value of Preparing Consolidated Financial Statements for national government departments and their respective public entities: A Cost – Benefit Analysis

Authors: | Prof HE KlingelhöferResearch ProfessorDepartment of Managerial Accounting and FinanceTshwane University of Technology | Dr Lourens Jacobus ErasmusSenior LecturerDepartment of Public Sector Finance Tshwane University of Technology |

Address: | Faculty of Economics and FinanceDepartment of Managerial Accounting and FinanceRoom 117Building 12Garankuwa Campus | Faculty of Economics and FinanceDepartment of Public Sector FinanceRoom Pastel ozzi BuildingGarankuwa campus |

E-mail: | klingerhoeferhe@tut.ac.za | erasmuslj@tut.ac.za |

Tel: | (012) - 382 0664 | (012) – 382 0566 |

Fax: | (012) – 703 4869 | |

Authors: | Mr Sipho John MalulekePost-graduate student Tshwane University of Technology (TUT) |

Address: | Faculty of Economics and FinanceDepartment of Managerial Finance and AccountingRoom 110 Building 12TUT Garankuwa campus |

E-mail: | maluleke89@gmail.com |

Tel: | 0737780339 |

Fax: | 0866215784 |

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The Public Finance Management Act (PFMA) requires all government departments and public entities to comply with the Generally Recognised Accounting Practice (GRAP) in preparing their annual financial statements. The standards of GRAP follow an accrual basis of accounting which is still in the process of being introduced into the public service. Currently a modified cash basis of accounting is followed. Public entities have been applying International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) which is based on accrual accounting and for the purpose of compliance to the PFMA, it is accepted as GRAP.

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This study focuses on GRAP 6 of the Standards which deals with consolidated financial...