The recently-implemented International Financial Reporting Standards (IFRS) have impacted UAE companies in a big way. Many firms started the implementation process late and are now trying to catch up, experts said at a conference in Dubai on Saturday.
Padmanabha Acharya, partner, Audit and Assurance at Deloitte & Touche (ME), said three big IFRS accounting standards – 9, 15 and 16 – have hit UAE companies in the last one year and caused volatility.
“These new standards are causing a lot of volatility in terms of both income statement and balance sheet presentation. For example, IFRS 15 – which affects revenue recognition – has had a massive impact on the UAE telecom as well as real estate sectors. In the telecom industry, the balance sheet or retained earnings of listed entities on Abu Dhabi and Dubai stock markets have increased by Dh766 million only on account of application of one standard. This shows the quantum and magnitude of these new standards,” he said.
“On account of IFRS 15, many real estate companies have changed contracts with their customers to take benefit of the revenue recognition norms, allowing the firms to recognise revenues over a period of time rather than at the time of delivering the house to customers,” Acharya said on the sidelines of the IFRS Super Conference, organised by the Institute of Chartered Accountants of India (ICAI) – Dubai chapter and attended by hundreds of members of the accounting fraternity.
Abbas Ali Mirza, past chairman of ICAI Dubai chapter; M.P. Vijay Kumar, ICAI Central Council member; Asim Rasheed, group financial controller, Emirates NBD; Irshad Jooma, principal, Deloitte & Touche; and Ranjit Chandran, partner, Deloitte, Kuwait, also addressed the ICAI members and answered their queries about IFRS.
“Implementation of these new IFRS standards has been a challenge for companies because many had not started it early. This means that a lot of work has to be done towards the end of the year rather than throughout the period. Also, it requires a lot of work from IT side. Many companies have been caught off-guard by the signature, scale, timing and extent of the changes. So, it has been a challenge for UAE companies to adopt these standards,” said Acharya, who is also president of the Indian Business and Professional Group in Abu Dhabi.
He said that to a certain extent, listed companies were better prepared because they had been reporting quarterly results but those firms which didn’t have to publish results within a time frame are still getting around.
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courtesy to Khaleej Times
