Assessment of the qualitative characteristics: a public sector analysis

Abstract

This paper’s aim is to determine the extent to which the South African public sector entities disclose in the annual report information which fulfils the qualitative characteristics of Generally Recognised Accounting Practices (GRAP). Assessing the qualitative characteristics assists the public sector entities demonstrate stewardship. The annual reports of the entities included in schedule 3A of the Public Finance Management Act 1999 (PFMA) were thoroughly reviewed and were scored against an index. This research has used a descriptive quantitative research methodology which produced descriptive statistics, these were then used to assess the fulfilment of the qualitative characteristics. As per the research, the researcher identified that the public sector companies do, in fact, fulfil the qualitative characteristics for relevance, reliability, understandability and comparability. The public sector companies did obtain poor results when it came to timeliness. This was due to the extended period from the financial year-end and the date on which the financial results were signed. The research is limited to the public sector and no research has been performed over entities within the private sector. The reason is that only public sector entities comply with GRAP. The only public entities included in this study were the entities included in schedule 3A from the PFMA. There has been limited research on the quality of financial reporting in terms of GRAP. There has also been limited research on the fulfilment of the qualitative characteristics in terms of GRAP.