A Statutory Construction and Policy Analysis of Accounting Law in South Africa

​Abstract

This paper is about Accounting Law, or the law regarding the content of financial statements, which is governed by section 29(1) of the Companies Act 71 of 2008. Based on an initial reading of the language used in section 29(1) of the Companies Act 71 of 2008, it contains what can be viewed as a redundant provision - section 29(1)(b) of the Companies Act 71 of 2008. However, the semi-colon at the end of each platform sentence used in section 29(1) of the Companies Act 71 of 2008 proves that section 29(1) of the Companies Act 71 of 2008 does not contain repetitive or redundant provisions. Such a provision raises constitutional issues. The Constitutional Court case in Qwelane v South African Human Rights Commission 2021 6 SA 579 (CC) dealt with whether platform sentences within a statutory provision must be read conjunctively or disjunctively. Based on the findings by the Constitutional Court, I submit that sections 29(1)(a) and (b) of the Companies Act 71 of 2008 must be read conjunctively, which results in section 29(1)(a) and (b) not being mutually exclusive. The first platform sentence, section 29(1)(a) of the Companies Act 71 of 2008, mandates that a company apply accounting standards in determining the content of financial statements. The second platform sentence, section 29(1)(b) of the Companies Act 71 of 2008, requires that the content of financial statements must "present fairly". The creators of accounting standards, the International Accounting Standards Board, claim that applying their accounting standards will result in the content of financial statements "present[ing] fairly". The question I address in this study is why the government of South Africa determined that the "present fairly" standard be mandated when using accounting standards will present the content of financial statements fairly. Through the prism of the Bill of Rights, I determined that accounting standards are only a "means to an end", the end being compliance with the separate legal requirement in section 29(1)(b) of the Companies Act 71 of 2008, for financial statements to "present fairly".