Accrual transition journey for South African departments: from modified cash standard (MCS) to standards of generally recognised accounting practice (GRAP) Perceived views from key stakeholders on the readiness, challenges and recommendations for departments to transition and adopt full accrual accounting

Lyner, Tracy-Leigh

Accrual transition journey for South African departments: from modified cash standard (MCS) to standards of generally recognised accounting practice (GRAP) Perceived views from key stakeholders on the readiness, challenges and recommendations for departments to transition and adopt full accrual accounting

Thesis / Dissertation

2026

Publisher

University of Cape Town

Department

College of Accounting

Faculty

Faculty of Commerce

Abstract

Purpose: The delayed development and implementation of an integrated financial management system (IFMS) for national and provincial departments in South Africa is cited as the reason for the continuous extension of the effective date for adopting the standards of Generally Recognised Accounting Practice (GRAP Accounting Standards). Literature suggests that a successful transition to full accrual accounting requires various key factors, not only the existence of accrual accounting standards and an IFMS. With the exemption deadline of 1 April 2026 approaching, this study aimed to identify whether South African departments were ready to adopt full accrual accounting (i.e. GRAP Accounting Standards). In addition, this study focused on identifying challenges and making recommendations for a successful transition to and adoption of GRAP Accounting Standards. Methodology: A qualitative study was conducted through interviews with key stakeholders, including standard setters, implementers, assurance providers, reviewers and end-users of financial statements. The data collected from the interviews were subjected to a thematic analysis, during which themes and patterns were identified. Findings: The study found that most participants (81%) did not believe departments were ready to adopt GRAP Accounting Standards by the 1 April 2026 deadline. The reasons and challenges for the delay in the transition are the lack of an IFMS, insufficient political will, technical skills and capacity challenges and a lack of understanding of the benefits of accrual accounting (i.e., GRAP Accounting Standards). On average, participants estimated the transition would take more than three years and stated that a phased approach should be taken rather than a “big bang” approach. Key recommendations included the procurement and development of an IFMS, the establishment of a multi-disciplinary/multi-ministerial task team, the development and communication of an implementation plan to be monitored by an executive committee, piloting the transition at selected departments, technical training and skills capacity development initiatives and reviewing lessons learned from the local government's transition to and implementation of GRAP Accounting Standards. Participants believed that, while the South African government faced fiscal challenges, it had the financial resources to implement this transition without international financial support. However, their technical knowledge and experience gained through implementing similar changes worldwide would be helpful. Practical implications/contribution: The findings from this study will contribute to the body of literature on the transition from cash to full accrual accounting in the public sector, specifically from a South African government point of view (i.e., a developing country or emerging economy). Additionally, the findings can help stakeholders understand the key factors or preconditions necessary to implement public financial management reforms successfully.