| What is the difference between a statutory receivable and a contractual receivable? |
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Receivables in the public sector arise from arrangements established through contracts, legislation or similar means. These receivables are usually settled by delivering cash or another financial asset to another party or by providing goods or services.
There are two broad categories of receivables in the public sector – statutory receivables and contractual receivables. |
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| What is a statutory receivable? |
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A statutory receivable arises from legislation or similar means, such as regulations, by-laws, ministerial orders, cabinet or municipal council decisions, or similar (hereafter referred to as “legislation or similar means”). Examples of statutory receivables include property tax, traffic fines, penalties, appropriations, grants and other fees charged in terms of legislation or similar means. Statutory receivables can either be exchange or non-exchange in nature.
Statutory receivables are accounted for using the Standard of GRAP on Statutory Receivables (GRAP 108). |
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| What is a contractual receivable? |
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| A contractual receivable, for example, for the sale or provision of goods or services arises from contracts that are evidenced by: willing parties entering into the contract; rights and obligations for the parties to the arrangement, even though the rights and obligations do not result in the equal performance by each party; and performance and remedy for non-performance are enforceable by law. Contractual receivables are accounted for using the Standard of GRAP on Financial Instruments (GRAP 104). |
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| The difference between statutory and contractual receivables |
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The public sector is a highly regulated environment with overarching Acts and Regulations that govern the actions or behaviour of entities. Even if an entity’s operations are regulated by legislation, it does not automatically mean that all the transactions it undertakes arise from statute. Even if an entity is required to render certain services or undertake certain activities in terms of the Constitution of the Republic of South Africa, 1996, it does not necessarily mean that these services or activities are statutory.
Contractual and statutory arrangements can be distinguished in the following ways: | | Statutory receivables | Contractual receivables | | How the receivable arises | Undertaken in terms of legislation or similar means. | Governed by common law. | | Nature of the transaction | Parties are usually compelled to transact with each other in terms of legislation or similar means. | Parties are willing, and transactions are entered into voluntarily. | | Remedies for non-performance | Usually outlined in legislation or similar. | Agreed between the parties and enforced by law. |
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| The Board needs your comment |
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The Board is undertaking a post-implementation review (PIR) of GRAP 108 to assess the impact of the requirements in GRAP 108 on users and preparers. For this purpose, the Board approved an Invitation to Participate in the PIR of GRAP 108 (ED 207). Comment on ED 207 closes on 27 October 2024.
The Board welcomes comment from all stakeholders on any aspect of GRAP 108. One of the areas on which the Board seeks comment is to understand whether entities have challenges distinguishing receivables as statutory or contractual and, if any, what these challenges are.
Comment may also be provided through roundtable or direct consultations with the ASB. Contact [email protected] if you want to be invited to these consultations. |
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