Lack of proper planning of International Financial Reporting Standards (IFRS) implementation by Saudi companies can derail their compliance with the regulatory requirements, an industry expert said.
“As Saudi Arabia moves to reduce its dependency on oil, quality, transparent information, comparable to other preparers of IFRS reporting, will serve to attract direct foreign investment to the country,” added Paul Manduca, senior director, Audit at Deloitte Saudi Arabia, a professional services firm.
“Increased foreign direct investment and enhanced quality reporting, transparency and comparability are some of the key benefits that the country will enjoy from IFRS adoption.”
Saudi Arabia is soon set to join 130+ countries across the globe in the application of International Financial Reporting Standards (IFRS). Today, all companies in Saudi Arabia, other than banks and insurance companies, must follow accounting standards generally accepted in KSA as issued by the Saudi Organization for Certified Public Accountants (SOCPA). Banks and insurance companies are regulated by the Saudi Arabian Monetary Authority (SAMA-the Saudi Arabian central bank) and are already required to comply with IFRS.
The step change of moving from Saudi Generally Accepted Accounting Principles (GAAP) to IFRS comes with its challenges to corporates, practitioners and regulators alike. Some of the key challenges are the limited resource pool from which to draw upon.
Although this shortage is partially bridged by the numerous expatriates that have moved to the Kingdom, the Arabic language poses yet another challenge as all statutory financial statements prepared will be required to be filed with the relevant authority in Arabic. Consequently, there will be added pressure on Arabic-speaking qualified accountants to ensure that compliance with IFRS is, literally, not lost in translation.
A further challenge is the unique national practices of the country. Compliance with strict local laws and Sharia’ law may not always be in accordance with IFRS. Going forward, SOCPA may have to decide to amend any IFRS requirement that contradicts Sharia’ or local law, also taking into consideration the level of technical and professional preparedness in the Kingdom.
IFRS adoption in the Kingdom is among the topics discussed in the spring 2016 issue of Deloitte’s quarterly publication, the Middle East Point of View (ME PoV). The spring issue also explores other hot topics in the region including real estate, talent management, family business and fraud.
In “The ties that bind”, by Walid Chiniara, partner and Deloitte Private regional leader, and Yasmine Omari, Manager, Family Enterprise Consulting at Deloitte Middle East, the authors discuss a growing concern among many businesses in the Middle East and the Gulf, that of managing family business conflicts. Techniques for resolving disputes are examined in depth.
In “Dubai real estate predictions 2016”, Martin Cooper, Director, Real Estate, Deloitte Corporate Finance Limited offers his predictions on the real estate market in Dubai for 2016. Cooper retains a positive outlook for Dubai’s residential, hospitality, office and retail markets. The lifting of sanctions on Iran also presents potential opportunities for Dubai as financial capital in Iran is released.
In “Out of the shade”, Ghassan Turqieh, Partner, and Joana Abou Jaoude, senior manager, Consulting, at Deloitte Middle East discuss the need for talent management in the agenda of GCC public sector leaders as they seek to cope with the peculiarities of the GCC labor market and the governmental drivers impacting it.
In “Spotting a fraudster”, David Clements, Principal Director, Forensic Services at Deloitte Corporate Finance Limited, discusses the importance of spotting fraudulent behavior in the workplace. According to the author, “governance controls should be implemented and adhered to as a bare minimum of fraud prevention.”
This issue of the ME PoV also includes a special feature on Malta of relevance to Middle East companies, highlighting the country’s competitive advantage for business, investment, residence and citizenship. Four articles are featured in this special insert: “Malta is ready for business”, “Value-Added Malta”, “Taking up residency in Malta”, and “A door to the EU”. – TradeArabia News Service