Saudi Accounting Framework IFRS Framework

Saudi Accounting FrameworkSaudi Accounting FrameworkSaudi Accounting FrameworkSaudi Accounting Frameworkin comparison with in comparison with

IFRS FrameworkIFRS FrameworkIFRS FrameworkIFRS Framework

Muhammad Asif Iqbal ‐ Technical Advisor, SOCPA

h h bICAP KSA Chapter, KhobarMarch 7, 2012

Agenda

• Stat s of Acco nting Standards in Sa di Arabia

Agenda

• Status of Accounting Standards in Saudi Arabia

• SOCPA IFRS Convergence Project

• Analysis of some major differences between Saudi GAAP with IFRSs

2

STATUS OF ACCOUNTING STANDARDS IN SAUDI ARABIA

3

Regulatory FrameworkRegulatory Framework

SOCPA regulates Accounting profession:g g p

Saudi GAAP as issued by SOCPA (in Arabic) are applicable on all

type of companies.

There are two main regulators besides SOCPA:

( ) Capital Market Authority (CMA)

Regulates all listed companies.

Saudi Arabian Monetary Agency (SAMA) Saudi Arabian Monetary Agency (SAMA)

Regulates all Banks, Insurance companies and IFRSs are followed.

4

Saudi Accounting FrameworkSaudi Accounting Framework

In the absence of SOCPA standard / opinion on aIn the absence of SOCPA standard / opinion on aparticular accounting matter, relevant standardissued by IASB should be consideredissued by IASB should be considered.

I h b f b h i d dIn the absence of both, accounting standard orthe professional opinion or an application

d b SOCPA d hi h i f happroved by SOCPA and which is one of thelocally or internationally generally accepted

li iapplications.5

Adoption status of IAS/IFRSAdoption status of IAS/IFRS

Although the accounting standards issued by SOCPA are 21 in total, the General Presentation and Disclosure Standard covers six topics that are addressed individually by the following IFRSs:

• IAS 1 Presentation of Financial Statements• IAS 7 Cash Flow Statements• IAS 8 Accounting Policies, Changes in Accounting Estimates and

Errors• IAS 10 Events after the Balance Sheet Date• IAS 37 Provisions, Contingent Liabilities and Contingent Assets• IFRS 5 Non current Assets Held for Sale and Discontinued• IFRS 5 Non‐current Assets Held for Sale and Discontinued

Operations.

6

Adoption status of IAS/IFRS• 18 currently effective IFRSs have direct

Adoption status of IAS/IFRS18 currently effective IFRSs have direct corresponding SOCPA Accounting Standards

• 6 currently effective IFRSs are partially covered by y p y ySOCPA Accounting Standards

• 9 currently effective IFRSs have no corresponding y p gSOCPA Accounting Standards

• 3 SOCPA Accounting Standards have no corresponding IFRSs

7

IFRSs having direct corresponding d dSOCPA Accounting Standards

1. Presentation of Financial Statements (IAS 1)

2. Inventories (IAS 2)

3. Construction Contracts (IAS 11)

4. Income Taxes (IAS 12)

5 Property Plant and Equipment (IAS 16)5. Property, Plant and Equipment (IAS 16)

6. Leases (IAS 17)

7. Revenue (IAS 18)

8. Accounting for Government Grants (IAS 20) g ( )

9. Foreign Currency (IAS 21)

10. Related Party Disclosures (IAS 24)

11. Consolidated and Separate Financial Statements (IAS 27)

12. Investments in Associates (IAS 28)

13. Earnings Per Share (IAS 33)

14. Interim Financial Reporting (IAS 34)

15 Impairment of Assets (IAS 36)15. Impairment of Assets (IAS 36)

16. Intangible Assets (IAS 38)

17. Operating Segments (IFRS 8)

18. Business Combinations (IFRS 3) 8

IFRSs having partial corresponding SOCPA Accounting Standards

1. Cash Flow Statements (IAS 7)

SOCPA Accounting Standards

2. Accounting Policies, Changes in Accounting Estimates and Errors (IAS 8)

3 Events After the Balance Sheet Date (IAS 10)3. Events After the Balance Sheet Date (IAS 10)

4. Borrowing Costs (IAS 23)

5. Provisions, Contingent Liabilities and Contingent Assets (IAS 37) , g g ( )

6. Financial Instruments ‐ Recognition and measurement (IAS 39)

7. Non‐Current Assets Held for Sale and Discontinued Operations (IFRS 5)

9

IFRSs having no corresponding SOCPA Accounting Standards

1. Employee Benefits (IAS 19)

SOCPA Accounting Standards

2. Accounting and Reporting by Retirement Benefit Plans (IAS 26)

3. Financial Reporting in Hyperinflationary Economies (IAS 29)

4 Interests in Joint Ventures (IAS 31)4. Interests in Joint Ventures (IAS 31)

5. Financial Instruments ‐ Presentation (IAS 32)

6. Investment Property (IAS 40)

i i d i f S ( S )7. First‐time Adoption of IFRSs (IFRS 1)

8. Insurance Contracts (IFRS 4)

9. Exploration for and Evaluation of Mineral Resources (IFRS 6)

10. IFRS 7

11. IFRS 9

10

SOCPA Accounting Standards having no corresponding IFRSs

1. RESEARCH AND DEVELOPMENT COSTS

p g

2. ACCOUNTING FOR ZAKAT

3. ADMINISTRATIVE AND MARKETING EXPENSES

11

SOCPA Accounting Standards d d lunder development

SOCPA is currently working on the following eight standards:y g g g

1. Financial instruments (IAS 32)

2. Liabilities and contingencies (IAS 37)

3. Cost of software (IAS 38)

4. Agriculture (IAS 41)

( )5. Share dividend (IFRS 2)

6. Investment Property (IAS 40)

12

SOCPA Professionals opinions and interpretations

1. Presentation and depreciation of idle assets.

2. Presentation of early production of trees.

3. Amendment of productive age of fixed assets that is depreciated but still utilized.

4. Under construction entity to prepare incomplete set of financial statements?

5 Capitalization of financing cost of fixed assets5. Capitalization of financing cost of fixed assets.

6. Revaluation of fixed assets that is depreciated but still utilized.

7. Accounting treatment for real estate units prepared for sale by participation in timeparticipation in time.

8. Impairment of investment securities

9. Costs and Revenue during Commissioning Period

13

SOCPA IFRS CONVERGENCE PROJECTPROJECT

14

Convergence ApproachConvergence Approach

Develop IFRS‐equivalentSaudi Accounting Standards

Determine whether eachIFRS meets specified g

for the local regulatory framework withchanges such as removing optionaltreatments and adding disclosurerequirements where appropriate

IFRS meets specifiedcriteria set out in

local /sharia requirements

requirements, where appropriate

Present the Saudi Accounting Standards so developed for

approval of SOCPA Board afterapproval of SOCPA Board after completing the due process

Convergence ApproachConvergence Approach

• Ultimate objective is full convergence withUltimate objective is full convergence with IFRS

• Simplified standards for non public interest• Simplified standards for non public interest entities

A li i d f d d d• Application date of converged standards at a later date with the option of voluntary early

li iapplication

• SOCPA Survey

• A team of consultants has started working based on grouping of standards 16

SOCPA SurveySOCPA SurveyIntroduction SOCPA i tl id i t i it ti t d d b d th IFRSSOCPA is currently considering to issue its accounting standards based on the IFRSs after reviewing the local regulatory and other requirements. Purpose of this survey is to seek input from all the relevant stakeholders for identifying such issues based on which SOCPA may make modifications in the current text of IFRSs in order to be applicable in the Kingdom.

Access to IFRS You may refer the IFRSs electronically from the following website of IASB:

http://www.ifrs.org/IFRSs/IFRS.htm

CPD credit SOCPA will allow CPD credit of 1-15 hours depending upon the nature of your responses.

17

‘Marathon’ ahead

Critical success factors for IFRSi jconversion projects

LeadershipLeadership

CommunicationStrategy

Critical Success

Resources Time

Success Factors

KnowledgeProject Management

The task ahead – what is required to win the Marathon?win the Marathon?

Teamwork & Partnershiprequired within each entity and among all external stakeholdersrequired within each entity and among all external stakeholders

IFRS Convergence is not just a ‘Finance/Accounting’issue but ‘Entity wide’ issue and also it is a ‘Country Wide’issue.

COMPARISON OF SAUDI STANDARDS WITH IFRS

21

Quick comparison amongst principal statements

Principal Statements Principal StatementsIFRS

SOCPA

Balance Sheet Statement of Financial Position

Statement of Income Statement of Comprehensive Income(A separate Statement of income is required if two statement approach is followed)

f h l f h i iStatement of Cash Flows Statement of changes in equity

Statement of Changes in Shareholders’ Equity

Statement of Cash Flows

Notes to the financial statements Notes to the financial statements

Note the difference in sequence of the statements

22

Key differences between IFRS and SOCPA Key differences between IFRS and SOCPA GeneralGeneral‐‐ GeneralGeneral

Fair presentation

IFRSSOCPA Accounting Standards

• No such presumption • There is a presumption that application of IFRS would lead to fair presentation.

23


Departure from IFRS


• Not required. • IAS 1 requires specific disclosure for departures from IFRS.

24


Critical accounting judgments


• Not required.

• IAS 1 requires disclosure of critical judgments made by management in applying accounting policies.

25


Statement of unreserved compliance with IFRS


• Not required.

• IAS 1 requires specific disclosure for explicit and unreserved statement of compliance with IFRS.

26

Key differences between IFRS and SOCPA Key differences between IFRS and SOCPA ‐‐ GeneralGeneral‐‐ GeneralGeneral

Presentation of financial statements

Classification of liabilities

• Liabilities for which contractual t h b d f

• Liabilities are classified as non‐currentl if fi i i l t d b f


arrangements have been made for their settlement from other than current assets should be removed from current liabilities before issuing

only if refinancing is completed beforethe end of the reporting period.

the financial statements. Examples of these liabilities are:

– Short‐term loans which will be id b th d f lpaid by the proceeds from long‐

term loans.

– Commercial debts agreed to be settled by issuing capital stockssettled by issuing capital stocks.

27


Presentation of Balance sheet

Current Vs Non‐current


Current Vs Non current

• Deferred taxes are presented ascurrent or non‐current based on thenature of the related asset or liability.

• Deferred taxes are presented as non‐current.

y(Note: In the joint convergence project onincome taxes, IFRS is expected to convergewith US GAAP and hence present deferredtax as current or non‐ current based on thetax as current or non current based on thenature of the related asset or liability)

28



Extra ordinary items


Extra ordinary items

• Saudi GAAP specifically requires disclosure for Extra‐ordinary items.

• IAS 1 prohibits any items to bedisclosed as extraordinary items.

29

Key differences between IFRS and SOCPA Key differences between IFRS and SOCPA ‐‐ GeneralGeneral‐‐ GeneralGeneral


Income statement expense classification


Income statement expense classification

Required to present expenses based onfunction (for example, cost of sales,administrative).

Entities may present expenses based oneither function or nature (for example,salaries, depreciation).)

Note: There is a separate SOCPA standardon “Administrative and Marketing

However, if function is selected, certaindisclosures about the nature of expenses

t b i l d d i th tExpenses”, which requires theAdministration and Marketing Expensesto be disclosed separately – which clearlyindicates that presentation should be by

must be included in the notes.

indicates that presentation should be by“Function”.

30

Key differences between IFRS and SOCPAKey differences between IFRS and SOCPA‐‐ GeneralGeneral‐‐ GeneralGeneral


Comparatives


Comparatives

Comparative period should be similar.Comparative period may be shorter orlonger with disclosure of reasons for thesame.

31

Key differences between IFRS and SOCPA Key differences between IFRS and SOCPA Balance sheetBalance sheet–– Balance sheetBalance sheet

Inventories

Measurement method

• Weighted average method is a • LIFO is prohibited, however the entity


Measurement method

g gpreferable method for similar items.However, FIFO or LIFO methods may beused provided reasons and quantifyingthe difference with weighted average is

p ycan choose FIFO or weighted average cost method for valuing its inventories.

the difference with weighted average isdisclosed.

• Consistent cost formula for all

• Same cost formula must be applied to all inventories similar in nature or use to the entity

inventories similar in nature is notexplicitly required.

to the entity.

32


Inventories

Reversal of inventory write‐downs

• Not covered Previously recognized impairment


Reversal of inventory write downs

y g plosses are reversed, up to the amount of the original impairment loss when the reasons for the impairment no longer existlonger exist.

33


Inventories

Measuring inventory at net realisable value even if above cost

• Permitted, but based on a specific Permitted only for producers’


Measuring inventory at net realisable value even if above cost

pproduct (precious metals).

y pinventories of agricultural and forest products and mineral ores and for broker‐dealers’ inventories of commoditiescommodities.

34


Inventories

Measuring inventory at net realisable value even if above costMeasuring inventory at net realisable value even if above cost

35


Property plant and equipment

Measurement after initial recognition



• Measured at cost less accumulateddepreciation and impairment losses.

• Revaluation is prohibited.

• Benchmark treatment – measure theasset at cost less accumulateddepreciation and impairment losses.

• Allowed alternative treatment –measure assets at their Fair values withthe changes in fair values beingcredited to a revaluation reserve showncredited to a revaluation reserve shownunder equity of the entity.

36

Key differences between IFRS and SOCPAKey differences between IFRS and SOCPA ‐‐Cash flow statementCash flow statementCash flow statementCash flow statementDIRECT VERSUS INDIRECT METHOD


Only specifies format of indirect methodin the presentation standard

• Financial statement preparers have a choice between the direct and the indirect method in presenting the operating activities section of the statement of cash flows. IAS 7 recommends the direct method of presenting net cash from operatingpresenting net cash from operating activities.

37

Key differences between IFRS and Key differences between IFRS and SOCPASOCPA Cash flow statementCash flow statementSOCPA SOCPA ‐‐ Cash flow statementCash flow statement

IFRSSOCPA A i S d d

Cash and Cash Equivalents

SOCPA Standard for “Cash FlowStatement” does not refer to a specificperiod with regard to cash equivalents

• IAS 7 gives guidance to state that cash equivalents should be “when it has a


period with regard to cash equivalents.short maturity of, say, three months or less from the date of acquisition.”

38

Key differences between IFRS and Key differences between IFRS and SOCPASOCPA –– Balance sheetBalance sheetSOCPA SOCPA –– Balance sheetBalance sheet


Capitalization of Dismantling and Site Restoration Costs


• No guidance in the standard. Provision on site‐restoration and dismantling is mandatory. To the extent it relates to the fixed asset, the changes are added/deducted (after discounting) from the asset in the relevant period.

39



Capitalization of Dismantling and Site Restoration Costs

40



Depreciation on components of an asset


Depreciation on components of an asset

• Not covered. • Components of an asset with differing patterns of benefits must be depreciated separately.

41



Depreciation on idle asset


Depreciation on idle asset

• Depreciation is not calculated on the fixed assets that were determined to be disposed of immediately upon

• Should be depreciated even it is idle, but not if it is held for sale

taking that decision. However, there is no mention of idle assets.

• Opinion issued by SOCPA ‐ assets that were permanently idle and still in thewere permanently idle and still in the entity’s possession should be – if material – should be separated from other assets and their depreciation should be suspended.

42

Key differences between IFRS and Key differences between IFRS and SOCPASOCPA Balance sheetBalance sheetSOCPA SOCPA –– Balance sheetBalance sheet


Government Grants


Government Grants

• Not covered. The Saudi standard on Government Grants requires it to be accounted for as owner’s equity.

• Government grants received inconnection with acquisition of PPEmay be offset against the cost.

43



Reassessment of useful life, residual value and depreciation method


Reassessment of useful life, residual value and depreciation method

• Reviewed only when events or changes in circumstances indicate.

• Opinion issued by SOCPA

• Requires annually.

44



Measurement of self constructed asset


Measurement of self constructed asset

• Fixed asset that is self‐constructed, shall be recognized at the lower of cost or fair value when it is ready for

• On the same basis as acquired asset.

use. The difference between the cost of the asset and its fair value shall be charged to the fiscal period in which such asset is ready for use.such asset is ready for use.

45



Measurement of self constructed assetMeasurement of self constructed asset

46



Compensation for impairment


Compensation for impairment

• Only losses are recognized when becomes receivable. Unrealized gains are not recognized.

• Compensation from third parties for impairment or loss of items of PPE are included in the profit and loss account when the compensation becomes receivable.

47



Compensation for impairmentCompensation for impairment

48



Revenue during commissioning period



• Covered only to the extent of capitalizing pre‐operating costs. No mention of incidental revenue.

• Costs of testing whether the asset is functioning properly, after deducting the net proceeds from selling any items produced while bringing the asset to that location and condition (such as samples produced when testing equipment) should betesting equipment) should be captailized;

49

Key differences between IFRS and Key differences between IFRS and SOCPA SOCPA –– Balance sheetBalance sheet



Construction work in progress (CWIP)

CWIP are recognized at cost of materials and services needed to fabricateCWIP are recognized at cost of materials and services needed to fabricate the plant and equipment plus salaries and other costs that can be specifically identified as necessary costs to have the plant ready for its intended use and other overheads allocated on a systematic basis as well yas capitalized borrowing costs. The cost of CWIP is reduced by the net proceeds from sale of products during commissioning phase.

Related Party Transactionsy

The company has sold part of its testing products during the year to one of its related parties which amounted to 117.3 million.

50

Key differences between IFRS and Key differences between IFRS and SOCPASOCPA –– Balance sheetBalance sheetSOCPA SOCPA Balance sheetBalance sheet

Intangible Assets

Incorporation Costs


May be capitalized Not allowed to be capitalized

‐ 51 ‐ 51


Intangible Assets



Should be measured at its historical costless accumulated amortisation.

Can be held at cost or at fair value.

‐ 52 ‐ 52


Intangible Assets

‐ 53 ‐ 53


Borrowing Costs

Qualifying Assets

Limited to fixed assets that take Includes inventories that require


substantial period of time to get ready for its intended use or sale

substantial period of time to bring them in saleable condition

‐ 54 ‐ 54



Impairment assessment

• SOCPA also lists various factors • IAS 36 has a list of external and internal


however initially the impairment isassessed by comparing the grossundiscounted cash flows from theassets with its carrying value.

indicators of impairment.

• If there is an indication that an assetmay be impaired, then the asset'srecoverable amount is calculated –assets with its carrying value.

• If gross cash flows are higher thancarrying amount = no impairment

• If gross cash flows are lower than

recoverable amount is calculated –which is higher of assets net sellingprice or value in use.

• The difference between recoverablegcarrying amount = impairment isrecognized based on discounted cashflows.

amount and carrying value isimpairment.

‐ 55 ‐ 55


INVESTMENT PROPERTIES

Accounting for investment properties

Shall be valued at cost. Investment property shall be measured at


SOCPA allows only disclosure of the fair value information in the explanatory notes to the financial statements

its cost or fair value

‐ 56 ‐ 56


Financial instruments

General

• SOCPA has issued a separate standarddealing with investment in securities –

• Separate standards for accounting anddisclosure of Financial instruments has


dealing with investment in securitieshowever the guidance is limited anddetailed aspects are not covered.

• Practically companies are applying

disclosure of Financial instruments hasbeen issued which contains extensiveguidance.

• The standards are being furtherIFRS where guidance in SOCPA is notavailable.

• No guidance available regardingaccounting of derivatives

enhanced and looks into all aspects offinancial instruments like classification,recognition and measurement, de‐recognition impairment etcaccounting of derivatives.

• No guidance on hedge accounting

recognition, impairment etc.

• Detailed guidance available foraccounting for derivatives and hedges

‐ 57 ‐ 57



Classification

• Financial instruments can be classified as

• Financial instruments can be classified as


classified as

– Trade securities

– Available for sale

Held to Maturity

as

– At fair value through profit or loss (which includes trading and designated instruments)– Held to Maturity

Loans and receivables is specifically not mentioned as the SOCPA standard deals with Investment in securities

g )

– Available for sale

– Held to Maturity

– Loans and receivablesdeals with Investment in securities only

• Transfers between classes is ordinarily permissible.

Loans and receivables

• Transfer between classes is permissible if certain conditions are met.

‐ 58 ‐ 58




Measurement

• On acquisition, Securities shall bemeasured and recorded at cost. Thecost includes the purchase price and all

• Initially, financial assets and liabilitiesshould be measured at fair value(i l di i f


cost includes the purchase price and allthe expenses incurred by theenterprise for the purpose of acquiringthe securities.

(including transaction costs, for assetsand liabilities not measured at fair valuethrough profit or loss).

• Determination of FV: IAS 39 provides a• Determination of FV: Securities which

have no active market and there areno sufficient indicators to allowdetermination of market value

Determination of FV: IAS 39 provides ahierarchy to be used in determining thefair value for a financial instrument andassumes that fair value of the

determination of market valueobjectively (e.g. Equity securities) thenthe cost is considered as mostappropriate objective and reliable

instrument cannot be determined onlyin rare cases.

measurement of the fair value ofsecurities.

‐ 59 ‐ 59



Impairment


Impairment

• Decline in fair value is consideredother than temporary if there arecertain indicators proving its continuity

• Decline in fair value is considered permanent and the security is considered impaired if the decline in its

or these indicators could indicate thenature of the decline

• Significance of the decline and periodhas to be considered while

fair value below cost is significant orprolonged.

• Other qualitative factors are also to be consideredhas to be considered while

determining whether the decline in fairvalue is to be considered asimpairment.

considered.

‐ 60 ‐ 60

Key differences between IFRS and Key differences between IFRS and SOCPASOCPA –– Income statementIncome statementSOCPA SOCPA –– Income statementIncome statement

Foreign Currency

• Foreign currency transactions arerecognized and reported in Saudi Riyals

• A foreign currency transaction shall berecorded on initial recognition in the


only.recorded, on initial recognition in thefunctional currency, which may beother than the presentation currency.

‐ 61 ‐ 61

Key differences between IFRS and Key differences between IFRS and SOCPASOCPA –– Special TopicsSpecial TopicsSOCPA SOCPA –– Special TopicsSpecial Topics

Employee benefits

Post employment benefits


Post employment benefits

• Limited guidance available howeverthe standards do require the longterm obligations to be discounted toreflect the current costs

• Detailed guidance is available under IAS19 for post employment benefits.

• The accounting requires the Companiesreflect the current costs.

• Practically, companies are accountingfor the End of Service Benefits (EOSB)obligations based actual payments

to discount their obligation under thedefined benefit plans and reflect thecurrent costs in their financialstatements – the present obligation is

that the Company would require tomake – few companies are using theactuarial valuations also.

statements – the present obligation isusually determined based on actuarialadvice.

‐ 62 ‐ 62


Employee benefits

Post employment benefitsPost employment benefits

‐ 63 ‐ 63


Taxation and Zakat


• Zakat is charged to income statementif the Company is wholly owned bySaudi shareholders otherwise it is

• Income tax is covered and is a charge tothe income statement

• No separate standard available to dealcharged to equity

• Income tax is charged to the incomestatement if the Company is whollyowned by non‐local shareholders

with Zakat

• Deferred tax is provided for alltemporary differences

owned by non local shareholdersotherwise it is charged to equity

• Deferred tax requirements are similarto IFRS however IFRS is much mored t il ddetailed.

‐ 64 ‐ 64

Key differences between IFRS and Key differences between IFRS and SOCPASOCPA –– Special TopicsSpecial TopicsSOCPA SOCPA Special TopicsSpecial Topics

Leases

Criteria for classification as finance lease


Prescriptive – should satisfy one of thefollowing four conditions to be classifiedas finance lease

Principle based ‐ substance over formrequirement – transfer of substantially allrisks and rewards incident to ownership is

• 90% of the value of the assets• 75% of the life of the assets• Bargain purchase option

to be considered while deciding theclassification of the lease

g p p• Transfer of ownership at the end of the

lease term

‐ 65 ‐ 65


Interim financial reporting

Minimum contents

• Minimum contents • Minimum contents

d d f f l


– Balance sheet

– Income statement

– Cash flows statement

– Condensed statement of financial position

– Condensed comprehensive income

Condensed statement of changes in– Selected explanatory notes

• A statement that results for the interim

– Condensed statement of changes in equity

– Condensed cash flow statement

– Selected explanatory notesperiod may not give an accurate indicator of the annual operating results is required to be included

– Selected explanatory notes

• No such statement required

‐ 66 ‐ 66



Integral vs discrete approach

• Requires the totality approach which • Generally allows the integral approach but also allows discrete approach in


considers that each period of the fiscal year is an integral part of the whole fiscal year.

but also allows discrete approach in certain cases like changes in estimates.

‐ 67 ‐ 67



Comparatives


Comparatives

• The comparative balance sheet reflects the balances as at the end of the corresponding period.

• The comparative balance sheet reflects the balances as at the end of the last financial year.

• For example in the financial statements for interim period ended 30 June 2010 ‐ the balance sheet comparative should show balance sheet as at 30

• For example in the financial statements for interim period ended 30 June 2010 ‐the balance sheet comparative should show balance sheet as at 31 Decembershould show balance sheet as at 30

June 2009.show balance sheet as at 31 December 2009.

‐ 68 ‐ 68

Key differences between IFRS and Key differences between IFRS and SOCPASOCPA –– Special TopicsSpecial TopicsSOCPA SOCPA –– Special TopicsSpecial TopicsConsolidated and separate financial statements

Minority interest


Minority interest

Shall be presented as a separate component of the equity section

Shall be presented within equity separately from the parent shareholders’ equity

‐ 70 ‐ 70


Related Parties


• Transaction oriented – e.g. disclosure to identify controlling party not needed as long as there

t ti

• Relationships between a parent and its subsidiaries shall be disclosed irrespective of whether there have

were no transactions

• External auditor is also a related party

been transactions between them.

• External auditor is not a related partyparty

• No mention of disclosure for management compensation

• Detailed disclosures required for all types of management compensation

management compensation

‐ 71 ‐ 71


Agriculture


• Does not allow the same through one of its opinion

• Measure biological assets/producing cattle (non‐current assets) at fair value

‐ 72 ‐ 72

CONCLUSIONCONCLUSION

73

End NoteEnd Note

► Transparency and integrity of financial reporting p y g y p gis essential for financial stability and growth.

►► Effective financial reporting depends not only on high quality accounting standards but also on the consistent and faithful application of thosethe consistent and faithful application of those standards.

► The financial crises have further strengthened the case for convergence of global financial reporting standardsreporting standards.

74

Thank youy

Questions & [email protected]

Th i d i thi t ti th fThe views expressed in this presentation are those of the presenter. Official positions of the SOCPA are determined only after extensive due process and

deliberation.

75

Saudi Accounting Framework IFRS Framework

Documents

Transcript of Saudi Accounting Framework IFRS Framework