Adoption of new accounting standards to pose challenges for local companies

Muscat: International Financial Reporting Standards (IFRS) 15 and its impact on revenue recognition was an area where business leaders from across Oman had gathered together at an Association of Chartered Certified Accountants (ACCA) event this week.
The International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) published their new converged standard on revenue recognition in May 2014. The standard will be effective for periods beginning on or after 1 January 2018 and therefore poses a number of early adoption challenges both locally in Oman and globally.
IFRS 15 is a control-based model, where the revenue is recognised when control of an asset (goods or services) passes. The series of criteria for determining whether control is transferred over time are new, and may well result in different patterns of revenue recognition than those previously seen under International Accounting Standard (IAS) 18 and IAS 11 for services and construction contracts.
Padmanabha Acharya, Audit Partner at Deloitte Middle East was one of several business leaders in attendance who shared key insights into the adoption of IFRS 15 and its impact on revenue recognition. During the event he discussed the associated changes resulting from adoption, and the impact it will have on the future of businesses and finance professionals across the region.
Padmanabha Acharya, Audit Partner at Deloitte Middle East stated: “IFRS 15 may have significant impact on entities in the region affecting recognition and measurement as well as the level of disclosures in the financial statements. Entities in the Telecommunication and Real Estate Industries in the region may have the most impact due to the adoption of this standard. The standard will also require new judgements, estimates, and changes to systems, processes and controls.”
Lindsay Degouve de Nuncques, head of ACCA Middle East, also thinks that ACCA professionals, including the large number of Omani members, are essential to managing such change. She stated:
“The latest changes are a reminder that the business world is continually evolving: ACCA’s own report Professional accountants — the future, in fact noted that regulatory shifts will be as potentially disruptive as technological innovation to a globalised world. As such it is vital to have professional accountants who are equipped with the vision and skills to adjust and anticipate such changes before they occur, to help businesses adapt to a changing world.”