Limpopo Gambling Board Final

LIMPOPO GAMBLING BOARD Financial Statements for the year ended 31 March 2023 Accounting Policies

1.17 Accounting by principals and agents Identification (continued) Identifying whether an entity is a principal or an agent

When the entity is party to a principal-agent arrangement, it assesses whether it is the principal or the agent in accounting for revenue, expenses, assets and/or liabilities that result from transactions with third parties undertaken in terms of the arrangement. The assessment of whether an entity is a principal or an agent requires the entity to assess whether the transactions it undertakes with third parties are for the benefit of another entity or for its own benefit. Binding arrangement The entity assesses whether it is an agent or a principal by assessing the rights and obligations of the various parties established in the binding arrangement. Assessing which entity benefits from the transactions with third parties When the entity in a principal-agent arrangement concludes that it undertakes transactions with third parties for the benefit of another entity, then it is the agent. If the entity concludes that it is not the agent, then it is the principal in the transactions. The entity is an agent when, in relation to transactions with third parties, all three of the following criteria are present: • It does not have the power to determine the significant terms and conditions of the transaction. • It does not have the ability to use all, or substantially all, of the resources that result from the transaction for its own benefit. • It is not exposed to variability in the results of the transaction. Where the entity has been granted specific powers in terms of legislation to direct the terms and conditions of particular transactions, it is not required to consider the criteria of whether it does not have the power to determine the significant terms and conditions of the transaction, to conclude that is an agent. The entity applies judgement in determining whether such powers exist and whether they are relevant in assessing whether the entity is an agent. Recognition The entity, as a principal, recognises revenue and expenses that arise from transactions with third parties in a principal- agent arrangement in accordance with the requirements of the relevant Standards of GRAP. Where the terms of a binding arrangement are modified, the parties to the arrangement re-assess whether they act as a principal or an agent.

LIMPOPO GAMBLING BOARD 2022/23

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