Namibia has no statutory accounting or auditing standard setting body as may exist in other jurisdictions.

ICAN, as the oldest accounting Institute representing the highest level of accounting professionals has been recognized as the leading Accounting Institute in Namibia. This recognition is best reflected in the 2004 Companies Act, Schedule 4, Section 5 which states " ... Statements of General Accepted Accounting Practice accepted and applied by the Institute of Chartered Accountants by Namibia" in the content of required disclosure by any Namibian company. Accordingly the Institute determines what constitutes Generally Accepted Practice in Namibia.

In respect of auditing standards, both the Companies Act and the Public Accountants' and Auditors' Act are silent as to any authority to set auditing standards. ICAN, in the absence of any specific statutory standard setter has accepted the responsibility to determine what shall constitute Namibian Generally Accepted Auditing Standards to be complied with by any ICAN members who carry out the attest (audit) function.

Since the formation of the Institute of Chartered Accountants of Namibia (ICAN) in 1990 the Institute has adopted the statements of Generally Accepted Accounting Practice (GAAP) issued by the South African Accounting Practices Board (APB) as representing Namibian GAAP. During this period there was only one deviation from South African GAAP in relation to the allowed alternative of LIFO for inventory valuation purposes.

During 2004 the International Federation of Accountants (IFAC) announced that the adoption of International Financial Reporting Standard (IFRS) would be expected for all member bodies for all financial periods commencing on or after 1 January 2005. ICAN, as a member of IFAC, would consequently be expected to comply with this IFAC expectation. This matter was considered by the Council of the Institute in the content of the needs of all stakeholders and regional developments.

Since 1993 South Africa has progressively been harmonizing South African GAAP with International Accounting Standards (IAS) or with the IFRS issued by the International Accounting Standards Board (IASB) being the successor to the International Accounting Standards Committee (IASC) which issued IAS. This process of harmonization was completed in June 2004 and the South African APB has since that date agreed to issue IFRS as statements of South African GAAP without amendment. The process of harmonization is comprehensively described in SAICA Circular 7/2004 issued by the South African Institute of Chartered Accountants (SAICA).

The adoption of IFRS as the Namibian Accounting Framework and Namibian GAAP would require that the prescriptions of IFRS 1 - First time Adoption of International Financial Reporting Standards be followed. The primary requirement of IFRS 1 is the retrospective application of all IFRS that are applicable at the reporting date to the prior reporting period's opening and closing balance sheets. IFRS 1 does allow certain limited exemptions where it is considered that the costs of retrospectively applying elements of specific IFRS would exceed the benefits thereof but these exemption are very limited. The second material requirement is that the financial statements disclose the effects of the transition from the previous GAAP applied to IFRS on the reporting entity's financial position, financial performance and cash flows. These two requirements will impose a significant additional responsibility on the preparers of financial statements were IFRS to be adopted as Namibian GAAP.

The effect of maintaining the practice of adopting South African GAAP (as updated from time to time) as Namibian GAAP will achieve the effective adoption of IFRS over a three year period as set out below.

Given the progression of compliance over the three year period as outlined, a reporting entity will be able to formally adopt IFRS as the accounting framework and refer to IFRS rather than to Namibian GAAP for reporting periods commencing on or after 1 January 2007 without having to embark on any retrospective application of IFRS and there should be no reconciliation required as IFRS will have been applied for the two preceding reporting periods.

The Council of the Institute of Chartered Accountants of Namibia, after consideration of the alternatives as outlined above, resolved on 24 November 2004 that the Institute would continue to adopt the South African statements of GAAP as issued by the APB, excluding IFRS 1, as representing Namibian GAAP. Accordingly preparers of financial statements and auditors reporting thereon should ensure that reference continues to be made to Namibian GAAP in the relevant paragraphs of the financial statements and the auditors report.

Compliance with full IFRS will be required by the Namibian Stock Exchange for all entities listed on the exchange whilst foreign holding companies may require compliance with IFRS for all group entities. In these cases reporting entities will have to comply with IFRS 1 where a first time adoption occurs.

Since the formation of the Institute of Chartered Accountants of Namibia (ICAN) in 1990 the Institute has adopted the entire suite of South African Auditing Standards (SAAS) issued by the Auditing and Assurance Standards Board (AASB) of the South African Public and Accountants' and Auditors' Board (SA PAAB) as representing Namibian Auditing Standards.

During 2004 the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC) announced that the adoption of international pronouncements issued by the IAASB would be expected for all member bodies. ICAN as a member of IFAC would consequently be expected to comply with this IFAC expectation.

Since 1994 SAAS statements have been based on IAASB standards and all pre 1994 SAAS statements have been brought in line with ISAAB standards. South Africa and therefore Namibia are for all intents and purposes already in line with IAASB standards. Namibia is thus ideally placed to converge its auditing standards with IAASB standards.

Council of ICAN, after considering the needs of all stakeholders, resolved to adopt the entire suite of IAASB pronouncements.

The international pronouncements, which include practice statements (hereafter referred to as IAASB Standards) to be adopted include:

These pronouncements will constitute Namibian Generally Accepted Auditing standards.