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New IFRS 15 Rules Demand More Disclosure From UAE Firms

New IFRS 15 Rules Demand More Disclosure From UAE Firms

The accounting rules are expected to impact some companies on how and when they recognise revenues, global audit firm KPMG said.

The new International Financing Reporting Standards (IFRS) 15 rules will affect the way companies in the UAE account for their revenues, global audit firm KPMG said in a statement.

The new revenue standards replace the existing IFRS and US Generally Accepted Accounting Principles (GAAP).

KPMG warned that adoption of IFRS 15 regulations will significantly impact some companies on how and when they recognise revenues while it might be easier for others to make the transition.

“If your company has operations in real estate, telecommunications, retail, asset management, building and construction, contract manufacturing, software, aerospace and defense, then you are more likely to be significantly affected by one or more of the new requirements,” said Sidharth Mehta, partner – KPMG.

“However, all companies will be subject to extensive new disclosure requirements.”

New IFRS 15 rules can also either accelerate or defer revenue recognition while there are also chances that the frequency of revenue recognition might be increased. This might in turn affect the contract terms and business practices, KPMG added.

The audit firm also noted that many property developers in the region are looking to adopt the new IFRS rules as they might result in them recognising their revenues on a percentage completion basis.

These regulations differ from the current scenario where developers are required to recognise revenues only during the handover of their properties.

Meanwhile, telecommunications companies are also looking to adopt IFRS regulations since they will have a significant impact on how these firms account for their bundle packages, KPMG said.

The UAE has been pushing for better transparency in its local market ever since it received MSCI upgrade to emerging markets status from frontier markets last year.

In addition, a recent bearish run in the region’s bourses between May and July 2014 also prompted calls from experts for better disclosure rules in the UAE to sustain long-term investor interest.

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