Abdullah Al Salmi to inaugurate major IFRS workshop

Muscat: The executive President of Capital Market Authority (CMA) Abdullah Al Salmi is to inaugurate the two day IFRS workshop organised by Crowe Mak Ghazali Chartered Accountants at The Crowne Plaza Hotel on Monday at 9am.
In a short of span of one year the business world has been hit by three game-changing accounting standards. International Financial Reporting Standards (IFRS) 9 which fundamentally shifts the approach entities must take when analysing loans for impairment especially the development of a risk model to arrive at the expected credit losses (ECL). The standard is effective from 2018.IFRS 15, dealing with revenue which became mandatory from the beginning of the year 2018 while IFRS 16 on Leases will become effective from the beginning of the year 2019.
Mandated for use in over 130 countries, IFRS are a set of international accounting guidelines on how the business transactions should be reported in financial statements. IFRS 15 requires entities to relook at their revenue streams and existing contracts with customers and will bring in a lot of discipline in their business practices.
Unlike the earlier standard that viewed revenue solely as a line item in the income statement, the new standard states that revenue recognition will have to be derived from changes in assets and liabilities. Firstly, the respective contract with the customer and the specific performance obligations must be identified within this contract. The total transaction price for the contract must then be determined and allocated to the individual performance obligations. The revenue recognition takes place immediately after the specific performance obligations have been fulfilled and in the amount of the correspondingly allocated proportionate transaction price. IFRS 15 will affect almost all sectors especially entities in telecom, construction, automotive retail, real estate, airlines, etc.
The other standard IFRS 16 deals with leases. Leasing is a key financial solution enabling companies to use property, plant and equipment without the need to incur large initial cash outflows. Current standard generally require lessees to account for lease transactions, either as off-balance sheet operating or as on balance sheet finance leases. Under IFRS 16, lessees will have to recognise almost all leases on the balance sheet which will reflect their right to use an asset for a period and the associated liability to pay rentals. The lessor’s accounting model remains mostly unchanged compared to the legacy standard. IFRS 16 will have many accounting and financial implications for companies: balance sheets will enlarge and earnings before interest, tax, depreciation and amortisation (Ebitda) and gearing ratios will increase. The new standard modifies both the expense character and recognition pattern, affecting almost all commonly used financial metrics such as asset turnover, interest cover, Earnings Before Interest & Tax (EBIT), operating profit, net income, earnings per share (EPS), Return on Capital Employed (ROCE), Return on equity (ROE) and operating cash flows.
These standards may require companies to transform their business processes, not just in finance and accounting, but also in IT, operations, tax, treasury and legal among others.
To be ready for these standards, companies should start thinking about their implementation plans now. Despite the practical experience provided, these standards are likely to have a great impact on many companies and transition will require substantive time and effort. The possible implications are too far reaching to procrastinate until the last minute. Many companies are seeking professional advice on the implementation of these guidelines. Hence it has become imperative for the companies to train their workforce.
Considering these, Crowe Mak Ghazali have arranged a two-day workshop on IFRS on September 3-4, 2018 at Crown Plaza, Muscat as their endeavour to impart knowledge to their clients and others. Being part of Crowe Global, CMG brings in a pool of global knowledge base and expertise into the profession to assist their clients navigating through daunting task of implementing these standards. The lead faculty for the workshop is James Ravi, FCA, CPA, and a former regional Director Middle East of The Institute of Chartered Accountants of India. Ravi specialises in IFRS training and implementation and has trained hundreds of Auditors in India and abroad including the big four.