Is your company ready for the International Financial Reporting Standards (IFRS)?
August 21, 2018
According to financial industry analysts, many listed companies have the awareness about IFRS changes in the U.A.E. but implementation might not have been started, as a result, the impact has not been quantified yet. According to our experts, some companies will have a massive impact, especially on the debt side. UAE companies’ debt is set to spike with new IFRS accounting rules. More liabilities will be recognized on the balance sheet with the new standards. Companies are working against time because most of them didn’t start early and are unprepared.It is going to be a major change in all financial statements especially for those with leases, smaller companies will have implications as they are booking now with the promise to pay future lease payments. Earlier, they used to book obligations at the end of the year; now, they have to book obligations upfront and recognize overtime.
IFRS 9 and 15 are applicable from 1 January 2018 and the year-end is approaching fast when the companies will have to include the impact of these standards in their year-end reporting along with the adjusted balance sheet as at the opening period presented. IFRS 9 will bring in a lot of fair value impact in profit and loss account instead of other comprehensive income which may impact the earnings per share (EPS) of the companies. IFRS 16 will be implemented from January 1, 2019, in retrospective effect. So, all ongoing leasees will come under the new standards. After the introduction of new IFRS guidelines large companies having any assets under the ‘right to use’ will come onto the company’s balance sheet.Companies engaged in the leasing business such as airlines, auto firms, and warehouse leasing firms will also be impacted by the introduction of the ‘right to use’ norm.
Some key highlights of his keynote were:
CA Abhinav Dhamija, Associate Director – Accounting Advisory Service of MBG Corporate Services, was a keynote speaker at the ICAI Dubai Chapter’s event and discussed “IFRS 15 – Revenue from Contracts with Customers.”
- Overview & Comparison of IFRS 15 with predecessor IFRS
- General Principles & Scope
- The 5 Step Model for Revenue Recognition,
- Identifying Performance Obligations,
- Contract modifications,
- Non-refundable Upfront Fees,
- Variable consideration.