Assets & GRAP
GRAP 21 & 26 Impairment Testing
Cash-generating and non-cash-generating asset impairment indicators and recoverable amounts.
Why impairment testing protects asset values
Public-sector assets carried above their recoverable amount overstate the financial position and breach the impairment standards, GRAP 21 for non-cash-generating assets and GRAP 26 for cash-generating ones. Auditors expect evidence that the entity assessed impairment indicators at each reporting date and measured recoverable amount where indicators exist. AuditPro Core structures the indicator review and the recoverable-amount calculation so impairment is neither overlooked nor applied without support.
The Numbers
AuditPro Core renders this view from your tenant's live, tamper-evident records. The figures below are illustrative sample data.
Indicators flagged
23
▲ 5
Impairment loss
R64 m
Reversals
R9 m
Tests outstanding
7
Impairment loss by asset type
Impairment test outcomes
| Asset | Recoverable basis | Loss (R m) |
|---|---|---|
| Water treatment works | Service potential | 22 |
| Refuse fleet | Value in use | 8 |
| Civic centre | Service potential | 14 |
Figures shown are illustrative sample data for demonstration. AuditPro Core renders these views from your own tenant's live, tamper-evident records.
Cash-generating versus non-cash-generating
An asset is cash-generating if held primarily to generate a commercial return; most service-delivery assets are non-cash-generating. The classification determines whether GRAP 26 or GRAP 21 applies and how recoverable amount is measured.
Impairment indicators
At each reporting date the entity assesses external and internal indicators such as physical damage, cessation of demand, technological obsolescence or a fall in service potential. The presence of any indicator triggers a recoverable-amount calculation.
Recoverable service amount
For non-cash-generating assets, recoverable service amount is the higher of fair value less costs to sell and value in use, where value in use reflects remaining service potential. This may use a depreciated replacement cost or restoration cost approach.
Reversal of impairment
If indicators reverse, a previously recognised impairment loss is reversed up to the carrying amount that would have applied had no impairment occurred. The reversal must be supported by the same indicator discipline.
How AuditPro Core Bridges the Gap
- Indicator checklist: the GRAP 21 and 26 indicator set is applied to every asset class each period, with the assessment retained as evidence.
- Recoverable-amount workings: calculations are captured with their inputs so the impairment charge traces from the model to the ledger.
- Exception workflow: assets showing indicators but no calculation, or carried above recoverable amount, are flagged for resolution.
- Continuous monitoring: indicators are re-tested period over period so both impairments and reversals are caught when conditions change.
Key Takeaways
- Assess impairment indicators at every reporting date, for every asset class.
- Classify assets as cash-generating or not to select the correct standard.
- Measure recoverable amount only where an indicator is present, and document the basis.
- Reverse prior impairments when indicators reverse, capped at the un-impaired carrying amount.
See This on Your Own Data
AuditPro Core renders this dashboard from your tenant's live, tamper-evident records — every figure traceable to source.