Vimbai Francisca Murenga, Ingrid Baigrie
Abstract
This paper assesses the extent to which South African banks are classifying financial instruments into the appropriate fair value hierarchy levels as indicated in International Financial Reporting Standard 13 (IFRS 13) Fair Value Measurement, as well as the extent to which they are complying with the disclosure requirements of IFRS 13. Ten banks, all listed on the Johannesburg Stock Exchange and registered in terms of the Banks Act of South Africa were selected for the study. The valuation approaches and inputs disclosed in the financial statements were assessed to determine whether the level in the Fair Value Hierarchy in which the financial instruments were classified was appropriate.
Compliance with the IFRS 13 disclosure requirements was assessed by identifying the level in the fair value hierarchy to which the asset or liability was assigned and comparing the disclosures given in the financial statements with a disclosure checklist. This research contributes to existing literature on fair value accounting by providing information on the classification of financial instruments and the extent of compliance with the IFRS 13 disclosure requirements by South African banks.