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The value-added statement: An appeal for standardisation

G Arangies, Chipo Mlambo, W D Hamman and B W Steyn-Bruwer

MPRA Paper from University Library of Munich, Germany

Abstract: Owing to the absence of accounting standards for the preparation of a value-added statement (VAS), a large variety of methods are used in financial statements. In this study the published value-added statements (PVAS) of companies listed on the JSE Securities Exchange during the period 1976-2005 have been standardised by the Graduate School of Business of the University of Stellenbosch (USB) in order to quantify the differences between the standardised VAS (SVAS) and the PVAS. These differences consist of the inclusion of items that do not belong in the VAS, items that are erroneously allocated among the distribution to stakeholders, and interpretation differences in whether a certain item forms part of the calculation of value added or the distribution thereof. The greatest difference quantified was the overstatement of the distribution to government that amounted to 54.4% of total differences. For users, including government, to properly calculate and compare the value added of different business entities, a standard for the preparation and presentation of VAS ought to be published. In the South African context the need of a precise measurement of each business entity's contribution to the growth of the national economy is relevant, and this need should also be addressed.

Keywords: Value added; Gross Domestic Product; South Africa; financial statements (search for similar items in EconPapers)
JEL-codes: M41 O47 (search for similar items in EconPapers)
Date: 2008
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Published in Management Dynamics 1.17(2008): pp. 31-43

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