SaudiAccountingFramework

incomparisonwith

IFRSFramework
MuhammadAsifIqbalTechnicalAdvisor,SOCPA ICAPKSAChapter,Khobar
March7,2012

Agenda
StatusofAccountingStandardsinSaudiArabia SOCPAIFRSConvergenceProject Analysisofsomemajordifferencesbetween SaudiGAAPwithIFRSs

STATUSOFACCOUNTINGSTANDARDS INSAUDIARABIA
3

RegulatoryFramework
SOCPAregulatesAccountingprofession: SaudiGAAPasissuedbySOCPA(inArabic)areapplicableonall typeofcompanies. TherearetwomainregulatorsbesidesSOCPA: CapitalMarketAuthority(CMA) Regulatesalllistedcompanies. SaudiArabianMonetaryAgency(SAMA) RegulatesallBanks,InsurancecompaniesandIFRSsare followed.
4

SaudiAccountingFramework
IntheabsenceofSOCPAstandard/opinionona particular accounting matter, relevant standard issuedbyIASBshouldbeconsidered. In the absence of both, accounting standard or the professional opinion or an application approved by SOCPA and which is one of the locally or internationally generally accepted applications.
5

AdoptionstatusofIAS/IFRS

AlthoughtheaccountingstandardsissuedbySOCPAare21intotal, theGeneralPresentationandDisclosureStandardcoverssixtopics thatareaddressedindividuallybythefollowingIFRSs: IAS1PresentationofFinancialStatements IAS7CashFlowStatements IAS8AccountingPolicies,ChangesinAccountingEstimatesand Errors IAS10EventsaftertheBalanceSheetDate IAS37Provisions,ContingentLiabilitiesandContingentAssets IFRS5NoncurrentAssetsHeldforSaleandDiscontinued Operations.

 AdoptionstatusofIAS/IFRS
18currentlyeffectiveIFRSshavedirect correspondingSOCPAAccountingStandards 6currentlyeffectiveIFRSsarepartiallycoveredby SOCPAAccountingStandards 9currentlyeffectiveIFRSshavenocorresponding SOCPAAccountingStandards 3SOCPAAccountingStandardshaveno correspondingIFRSs

IFRSshavingdirectcorresponding SOCPAAccountingStandards
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. PresentationofFinancialStatements(IAS1) Inventories(IAS2) ConstructionContracts(IAS11) IncomeTaxes(IAS12) Property,PlantandEquipment(IAS16) Leases(IAS17) Revenue(IAS18) AccountingforGovernmentGrants(IAS20) ForeignCurrency(IAS21) RelatedPartyDisclosures(IAS24) ConsolidatedandSeparateFinancialStatements(IAS27) InvestmentsinAssociates(IAS28) EarningsPerShare(IAS33) InterimFinancialReporting(IAS34) ImpairmentofAssets(IAS36) IntangibleAssets(IAS38) OperatingSegments(IFRS8) BusinessCombinations(IFRS3)

IFRSshavingpartialcorresponding SOCPAAccountingStandards
1. CashFlowStatements(IAS7) 2. AccountingPolicies,ChangesinAccountingEstimatesandErrors (IAS8) 3. EventsAftertheBalanceSheetDate(IAS10) 4. BorrowingCosts(IAS23) 5. Provisions,ContingentLiabilitiesandContingentAssets(IAS37) 6. FinancialInstrumentsRecognitionandmeasurement(IAS39) 7. NonCurrentAssetsHeldforSaleandDiscontinuedOperations (IFRS5)
9

IFRSshavingnocorresponding SOCPAAccountingStandards
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
10

EmployeeBenefits(IAS19) AccountingandReportingbyRetirementBenefitPlans(IAS26) FinancialReportinginHyperinflationaryEconomies(IAS29) InterestsinJointVentures(IAS31) FinancialInstrumentsPresentation(IAS32) InvestmentProperty(IAS40) FirsttimeAdoptionofIFRSs(IFRS1) InsuranceContracts(IFRS4) ExplorationforandEvaluationofMineralResources(IFRS6) IFRS7 IFRS9

SOCPAAccountingStandardshavingno correspondingIFRSs
1. 2. 3. RESEARCHANDDEVELOPMENTCOSTS ACCOUNTINGFORZAKAT ADMINISTRATIVEANDMARKETINGEXPENSES

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SOCPAAccountingStandards underdevelopment
1. 2. 3. 4. 5. 6. SOCPAiscurrentlyworkingonthefollowingeightstandards: Financialinstruments(IAS32) Liabilitiesandcontingencies(IAS37) Costofsoftware(IAS38) Agriculture(IAS41) Sharedividend(IFRS2) InvestmentProperty(IAS40)

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SOCPAProfessionalsopinionsand interpretations
1. 2. 3. 4. 5. 6. 7. 8. 9. Presentationanddepreciationofidleassets. Presentationofearlyproductionoftrees. Amendmentofproductiveageoffixedassetsthatisdepreciatedbutstill utilized. Underconstructionentitytoprepareincompletesetoffinancial statements? Capitalizationoffinancingcostoffixedassets. Revaluationoffixedassetsthatisdepreciatedbutstillutilized. Accountingtreatmentforrealestateunitspreparedforsaleby participationintime. Impairmentofinvestmentsecurities CostsandRevenueduringCommissioningPeriod

13

SOCPAIFRSCONVERGENCE PROJECT
14

ConvergenceApproach
Determinewhethereach IFRSmeetsspecified criteriasetoutin local/shariarequirements
DevelopIFRSequivalent SaudiAccountingStandards forthelocalregulatoryframeworkwith changessuchasremovingoptional treatmentsandaddingdisclosure requirements,whereappropriate

PresenttheSaudiAccounting Standardssodevelopedfor approvalofSOCPABoardafter completingthedueprocess

ConvergenceApproach
Ultimateobjectiveisfullconvergencewith IFRS Simplifiedstandardsfornonpublicinterest entities Applicationdateofconvergedstandardsata laterdatewiththeoptionofvoluntaryearly application SOCPASurvey Ateamofconsultantshasstartedworking basedongroupingofstandards

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SOCPASurvey
Introduction SOCPA 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.

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Marathonahead

CriticalsuccessfactorsforIFRS conversionprojects
Leadership Strategy Communication

Critical Success Factors

Time Resources

Project Management

Knowledge

Thetaskaheadwhatisrequiredto wintheMarathon?
Teamwork & Partnership
required 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.

COMPARISONOFSAUDISTANDARDS WITHIFRS
21

Quickcomparisonamongstprincipalstatements
PrincipalStatements SOCPA BalanceSheet StatementofIncome

PrincipalStatements
IFRS StatementofFinancialPosition StatementofComprehensiveIncome
(AseparateStatementofincomeisrequired iftwostatementapproachisfollowed)

StatementofCashFlows StatementofChangesinShareholders Equity Notestothefinancialstatements

Statementofchangesinequity StatementofCashFlows Notestothefinancialstatements

Notethedifferenceinsequenceofthestatements

22

KeydifferencesbetweenIFRSandSOCPA General
Fairpresentation SOCPAAccountingStandards
Nosuchpresumption

IFRS
Thereisapresumptionthatapplication ofIFRSwouldleadtofairpresentation.

23

KeydifferencesbetweenIFRSandSOCPA General
DeparturefromIFRS SOCPAAccountingStandards
Notrequired.

IFRS
IAS1requiresspecificdisclosurefor departuresfromIFRS.

24

KeydifferencesbetweenIFRSandSOCPA General
Criticalaccountingjudgments SOCPAAccountingStandards
Notrequired.

IFRS
IAS1requiresdisclosureofcritical judgmentsmadebymanagementin applyingaccountingpolicies.

25

KeydifferencesbetweenIFRSandSOCPA General
StatementofunreservedcompliancewithIFRS SOCPAAccountingStandards
Notrequired.

IFRS
IAS1requiresspecificdisclosurefor explicitandunreservedstatementof compliancewithIFRS.

26

KeydifferencesbetweenIFRSandSOCPA General
Presentationoffinancialstatements Classificationofliabilities SOCPAAccountingStandards
Liabilitiesforwhichcontractual arrangementshavebeenmadefor theirsettlementfromotherthan currentassetsshouldberemoved fromcurrentliabilitiesbeforeissuing thefinancialstatements.Examplesof theseliabilitiesare: Shorttermloanswhichwillbe paidbytheproceedsfromlong termloans. Commercialdebtsagreedtobe settledbyissuingcapitalstocks.

IFRS
Liabilities are classified as noncurrent only if refinancing is completed before theendofthereportingperiod.

27

KeydifferencesbetweenIFRSandSOCPA General
PresentationofBalancesheet CurrentVsNoncurrent SOCPAAccountingStandards
Deferred taxes are presented as current or noncurrent based on the natureoftherelatedassetorliability.

IFRS
Deferred taxes are presented as non current. (Note: In the joint convergence project on
income taxes, IFRS is expected to converge with US GAAP and hence present deferred tax as current or non current based on the natureoftherelatedassetorliability)

28

KeydifferencesbetweenIFRSandSOCPA General
Presentationoffinancialstatements Extraordinaryitems SOCPAAccountingStandards
SaudiGAAPspecificallyrequires disclosureforExtraordinaryitems.

IFRS
IAS 1 prohibits any items to be disclosedasextraordinaryitems.

29

KeydifferencesbetweenIFRSandSOCPA General
Presentationoffinancialstatements Incomestatementexpenseclassification SOCPAAccountingStandards
Required to present expenses based on function (for example, cost of sales, administrative). Note:ThereisaseparateSOCPAstandard on Administrative and Marketing Expenses, which requires the Administration and Marketing Expenses tobedisclosedseparatelywhichclearly indicates that presentation should be by Function.

IFRS
Entities may present expenses based on either function or nature (for example, salaries,depreciation). However, if function is selected, certain disclosures about the nature of expenses mustbeincludedinthenotes.

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KeydifferencesbetweenIFRSandSOCPA General
Presentationoffinancialstatements Comparatives SOCPAAccountingStandards
Comparativeperiodshouldbesimilar.

IFRS
Comparative period may be shorter or longer with disclosure of reasons for the same.

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KeydifferencesbetweenIFRSandSOCPA Balancesheet
Inventories Measurementmethod SOCPAAccountingStandards
Weighted average method is a preferable method for similar items. However,FIFOorLIFOmethodsmaybe used provided reasons and quantifying thedifferencewithweightedaverageis disclosed. Consistent cost formula for all inventories similar in nature is not explicitlyrequired.

IFRS
LIFOisprohibited,howevertheentity canchooseFIFOorweightedaverage costmethodforvaluingitsinventories. Samecostformulamustbeappliedto allinventoriessimilarinnatureoruse totheentity.

32

KeydifferencesbetweenIFRSandSOCPA Balancesheet
Inventories Reversalofinventorywritedowns SOCPAAccountingStandards IFRS
Notcovered Previouslyrecognizedimpairment lossesarereversed,uptotheamount oftheoriginalimpairmentlosswhen thereasonsfortheimpairmentno longerexist.

33

KeydifferencesbetweenIFRSandSOCPA Balancesheet
Inventories Measuringinventoryatnetrealisablevalueevenifabovecost SOCPAAccountingStandards IFRS
Permitted,butbasedonaspecific product(preciousmetals). Permittedonlyforproducers inventoriesofagriculturalandforest productsandmineraloresandfor brokerdealersinventoriesof commodities.

34

KeydifferencesbetweenIFRSandSOCPA Balancesheet
Inventories Measuringinventoryatnetrealisablevalueevenifabovecost

35

KeydifferencesbetweenIFRSandSOCPA Balancesheet
Propertyplantandequipment Measurementafterinitialrecognition SOCPAAccountingStandards
Measured at cost less accumulated depreciationandimpairmentlosses. Revaluationisprohibited.

IFRS
Benchmark treatment measure the asset at cost less accumulated depreciationandimpairmentlosses. Allowed alternative treatment measureassetsattheirFairvalueswith the changes in fair values being creditedtoarevaluationreserveshown underequityoftheentity.

36

KeydifferencesbetweenIFRSandSOCPA Cashflowstatement DIRECTVERSUSINDIRECTMETHOD

SOCPAAccountingStandards
Only specifies format of indirect method inthepresentationstandard

IFRS
Financialstatementpreparershavea choicebetweenthedirectandthe indirectmethodinpresentingthe operatingactivitiessectionofthe statementofcashflows.IAS7 recommendsthedirectmethodof presentingnetcashfromoperating activities.

37

KeydifferencesbetweenIFRSand SOCPACashflowstatement
CashandCashEquivalents SOCPAAccountingStandards
SOCPA Standard for Cash Flow Statementdoesnotrefertoaspecific periodwithregardtocashequivalents.

IFRS

IAS7givesguidancetostatethatcash equivalentsshouldbewhenithasa shortmaturityof,say,threemonthsor lessfromthedateofacquisition.

38

KeydifferencesbetweenIFRSand SOCPABalancesheet
Propertyplantandequipment CapitalizationofDismantlingandSiteRestorationCosts SOCPAAccountingStandards
Noguidanceinthestandard.

IFRS
Provisiononsiterestorationand dismantlingismandatory.Totheextentit relatestothefixedasset,thechangesare added/deducted(afterdiscounting)from theassetintherelevantperiod.

39

KeydifferencesbetweenIFRSand SOCPABalancesheet
Propertyplantandequipment CapitalizationofDismantlingandSiteRestorationCosts

40

KeydifferencesbetweenIFRSand SOCPABalancesheet
Propertyplantandequipment Depreciationoncomponentsofanasset SOCPAAccountingStandards IFRS
Notcovered. Componentsofanassetwithdiffering patternsofbenefitsmustbe depreciatedseparately.

41

KeydifferencesbetweenIFRSand SOCPABalancesheet
Propertyplantandequipment Depreciationonidleasset SOCPAAccountingStandards
Depreciationisnotcalculatedonthe fixedassetsthatweredeterminedto bedisposedofimmediatelyupon takingthatdecision.However,thereis nomentionofidleassets. OpinionissuedbySOCPAassetsthat werepermanentlyidleandstillinthe entityspossessionshouldbeif materialshouldbeseparatedfrom otherassetsandtheirdepreciation shouldbesuspended.

IFRS

Shouldbedepreciatedevenitisidle, butnotifitisheldforsale

42

KeydifferencesbetweenIFRSand SOCPABalancesheet
Propertyplantandequipment GovernmentGrants SOCPAAccountingStandards
Notcovered.TheSaudistandardon GovernmentGrantsrequiresittobe accountedforasownersequity.

IFRS
Government grants received in connection with acquisition of PPE maybeoffsetagainstthecost.

43

KeydifferencesbetweenIFRSand SOCPABalancesheet
Propertyplantandequipment Reassessmentofusefullife,residualvalueanddepreciationmethod SOCPAAccountingStandards IFRS
Reviewedonlywheneventsor changesincircumstancesindicate. OpinionissuedbySOCPA Requiresannually.

44

KeydifferencesbetweenIFRSand SOCPABalancesheet
Propertyplantandequipment Measurementofselfconstructedasset SOCPAAccountingStandards
Fixedassetthatisselfconstructed, shallberecognizedatthelowerof costorfairvaluewhenitisreadyfor use.Thedifferencebetweenthecost oftheassetanditsfairvalueshallbe chargedtothefiscalperiodinwhich suchassetisreadyforuse.

IFRS
Onthesamebasisasacquiredasset.

45

KeydifferencesbetweenIFRSand SOCPABalancesheet
Propertyplantandequipment Measurementofselfconstructedasset

46

KeydifferencesbetweenIFRSand SOCPABalancesheet
Propertyplantandequipment Compensationforimpairment SOCPAAccountingStandards
Onlylossesarerecognizedwhen becomesreceivable.Unrealizedgains arenotrecognized.

IFRS

Compensationfromthirdpartiesfor impairmentorlossofitemsofPPEare includedintheprofitandlossaccount whenthecompensationbecomes receivable.

47

KeydifferencesbetweenIFRSand SOCPABalancesheet
Propertyplantandequipment Compensationforimpairment

48

KeydifferencesbetweenIFRSand SOCPABalancesheet
Propertyplantandequipment Revenueduringcommissioningperiod SOCPAAccountingStandards
Coveredonlytotheextentof capitalizingpreoperatingcosts.No mentionofincidentalrevenue.

IFRS
Costsoftestingwhethertheassetis functioningproperly,afterdeducting thenetproceedsfromsellingany itemsproducedwhilebringingthe assettothatlocationandcondition (suchassamplesproducedwhen testingequipment)shouldbe captailized;

49

KeydifferencesbetweenIFRSand SOCPABalancesheet
Propertyplantandequipment Revenueduringcommissioningperiod Constructionworkinprogress(CWIP) CWIParerecognizedatcostofmaterialsandservicesneededtofabricate theplantandequipmentplussalariesandothercoststhatcanbe specificallyidentifiedasnecessarycoststohavetheplantreadyforits intendeduseandotheroverheadsallocatedonasystematicbasisaswell ascapitalizedborrowingcosts.ThecostofCWIPisreducedbythenet proceedsfromsaleofproductsduringcommissioningphase. RelatedPartyTransactions Thecompanyhassoldpartofitstestingproductsduringtheyeartooneof itsrelatedpartieswhichamountedto117.3million.

50

KeydifferencesbetweenIFRSand SOCPABalancesheet
IntangibleAssets IncorporationCosts SOCPAAccountingStandards
Maybecapitalized

IFRS
Notallowedtobecapitalized

51

51

KeydifferencesbetweenIFRSand SOCPABalancesheet
IntangibleAssets Measurementafterinitialrecognition SOCPAAccountingStandards
Should be measured at its historical cost lessaccumulatedamortisation.

IFRS
Canbeheldatcostoratfairvalue.

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52

KeydifferencesbetweenIFRSand SOCPABalancesheet
IntangibleAssets

53

53

KeydifferencesbetweenIFRSand SOCPABalancesheet
BorrowingCosts QualifyingAssets SOCPAAccountingStandards
Limitedtofixedassetsthattake substantialperiodoftimetogetready foritsintendeduseorsale

IFRS
Includesinventoriesthatrequire substantialperiodoftimetobringthemin saleablecondition

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54

KeydifferencesbetweenIFRSand SOCPABalancesheet
Propertyplantandequipment Impairmentassessment SOCPAAccountingStandards
SOCPA also lists various factors however initially the impairment is assessed by comparing the gross undiscounted cash flows from the assetswithitscarryingvalue. If gross cash flows are higher than carryingamount=noimpairment If gross cash flows are lower than carrying amount = impairment is recognized based on discounted cash flows.

IFRS
IAS36hasalistofexternalandinternal indicatorsofimpairment. If there is an indication that an asset may be impaired, then the asset's recoverable amount is calculated which is higher of assets net selling priceorvalueinuse. The difference between recoverable amount and carrying value is impairment.

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55

KeydifferencesbetweenIFRSand SOCPABalancesheet
INVESTMENTPROPERTIES Accountingforinvestmentproperties SOCPAAccountingStandards
Shallbevaluedatcost. SOCPAallowsonlydisclosureofthefair valueinformationintheexplanatory notestothefinancialstatements

IFRS
Investmentpropertyshallbemeasuredat itscostorfairvalue

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56

KeydifferencesbetweenIFRSand SOCPABalancesheet
Financialinstruments General SOCPAAccountingStandards
SOCPAhasissuedaseparatestandard dealingwithinvestmentinsecurities however the guidance is limited and detailedaspectsarenotcovered. Practically companies are applying IFRS where guidance in SOCPA is not available. No guidance available regarding accountingofderivatives. Noguidanceonhedgeaccounting

IFRS
Separatestandardsforaccountingand disclosureofFinancialinstrumentshas been issued which contains extensive guidance. The standards are being further enhancedandlooksintoallaspectsof financialinstrumentslikeclassification, recognition and measurement, de recognition,impairmentetc. Detailed guidance available for accountingforderivativesandhedges

57

57

KeydifferencesbetweenIFRSand SOCPABalancesheet
Financialinstruments Classification SOCPAAccountingStandards
Financialinstrumentscanbe classifiedas Tradesecurities Availableforsale HeldtoMaturity Loansandreceivablesisspecifically notmentionedastheSOCPAstandard dealswithInvestmentinsecurities only Transfersbetweenclassesisordinarily permissible.
58

IFRS
Financialinstrumentscanbeclassified as Atfairvaluethroughprofitorloss (whichincludestradingand designatedinstruments) Availableforsale HeldtoMaturity Loansandreceivables Transferbetweenclassesispermissible ifcertainconditionsaremet.
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KeydifferencesbetweenIFRSand SOCPABalancesheet Financialinstruments

Measurement SOCPAAccountingStandards IFRS
On acquisition, Securities shall be Initially, financial assets and liabilities measured and recorded at cost. The should be measured at fair value costincludesthepurchasepriceandall (including transaction costs, for assets the expenses incurred by the andliabilitiesnotmeasuredatfairvalue enterpriseforthepurposeofacquiring throughprofitorloss). thesecurities. DeterminationofFV:IAS39providesa DeterminationofFV:Securitieswhich hierarchytobeusedindeterminingthe have no active market and there are fairvalueforafinancialinstrumentand no sufficient indicators to allow assumes that fair value of the determination of market value instrument cannot be determined only objectively(e.g.Equitysecurities)then inrarecases. the cost is considered as most appropriate objective and reliable measurement of the fair value of securities. 59 59

KeydifferencesbetweenIFRSand SOCPABalancesheet
Financialinstruments Impairment SOCPAAccountingStandards IFRS

Decline in fair value is considered Declineinfairvalueisconsidered other than temporary if there are permanentandthesecurityis certainindicatorsprovingitscontinuity consideredimpairedifthedeclineinits or these indicators could indicate the fairvaluebelowcostissignificantor natureofthedecline prolonged. Significance of the decline and period Otherqualitativefactorsarealsotobe has to be considered while considered. determiningwhetherthedeclineinfair value is to be considered as impairment.

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60

KeydifferencesbetweenIFRSand SOCPAIncomestatement
ForeignCurrency SOCPAAccountingStandards IFRS
Foreign currency transactions are A foreign currency transaction shall be recognizedandreportedinSaudiRiyals recorded, on initial recognition in the only. functional currency, which may be otherthanthepresentationcurrency.

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61

KeydifferencesbetweenIFRSand SOCPASpecialTopics
Employeebenefits Postemploymentbenefits SOCPAAccountingStandards IFRS

Limited guidance available however DetailedguidanceisavailableunderIAS the standards do require the long 19forpostemploymentbenefits. term obligations to be discounted to TheaccountingrequirestheCompanies reflectthecurrentcosts. to discount their obligation under the Practically, companies are accounting defined benefit plans and reflect the fortheEndofServiceBenefits(EOSB) current costs in their financial obligations based actual payments statements the present obligation is that the Company would require to usually determined based on actuarial make few companies are using the advice. actuarialvaluationsalso.

62

62

KeydifferencesbetweenIFRSand SOCPASpecialTopics
Employeebenefits Postemploymentbenefits

63

63

KeydifferencesbetweenIFRSand SOCPASpecialTopics
TaxationandZakat SOCPAAccountingStandards IFRS

Zakatischargedtoincomestatement Incometaxiscoveredandisachargeto if the Company is wholly owned by theincomestatement Saudi shareholders otherwise it is No separate standard available to deal chargedtoequity withZakat Income tax is charged to the income Deferred tax is provided for all statement if the Company is wholly temporarydifferences owned by nonlocal shareholders otherwiseitischargedtoequity Deferred tax requirements are similar to IFRS however IFRS is much more detailed.
64 64

KeydifferencesbetweenIFRSand SOCPASpecialTopics
Leases Criteriaforclassificationasfinancelease SOCPAAccountingStandards
Prescriptive should satisfy one of the following four conditions to be classified asfinancelease 90%ofthevalueoftheassets 75%ofthelifeoftheassets Bargainpurchaseoption Transferofownershipattheendofthe leaseterm

IFRS
Principle based substance over form requirement transfer of substantially all risksandrewardsincidenttoownershipis to be considered while deciding the classificationofthelease

65

65

KeydifferencesbetweenIFRSand SOCPASpecialTopics
Interimfinancialreporting Minimumcontents SOCPAAccountingStandards IFRS
Minimumcontents Minimumcontents Condensedstatementoffinancial Balancesheet position Incomestatement Condensedcomprehensiveincome Cashflowsstatement Condensedstatementofchangesin Selectedexplanatorynotes equity Condensedcashflowstatement Astatementthatresultsfortheinterim Selectedexplanatorynotes periodmaynotgiveanaccurate Nosuchstatementrequired indicatoroftheannualoperating resultsisrequiredtobeincluded

66

66

KeydifferencesbetweenIFRSand SOCPASpecialTopics
Interimfinancialreporting Integralvsdiscreteapproach SOCPAAccountingStandards
Requiresthetotalityapproachwhich considersthateachperiodofthefiscal yearisanintegralpartofthewhole fiscalyear.

IFRS
Generallyallowstheintegralapproach butalsoallowsdiscreteapproachin certaincaseslikechangesinestimates.

67

67

KeydifferencesbetweenIFRSand SOCPASpecialTopics
Interimfinancialreporting Comparatives SOCPAAccountingStandards IFRS

Thecomparativebalancesheetreflects Thecomparativebalancesheetreflects thebalancesasattheendofthe thebalancesasattheendofthelast correspondingperiod. financialyear. Forexampleinthefinancialstatements Forexampleinthefinancialstatements forinterimperiodended30June2010 forinterimperiodended30June2010 thebalancesheetcomparative thebalancesheetcomparativeshould shouldshowbalancesheetasat30 showbalancesheetasat31December June2009. 2009.

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69

KeydifferencesbetweenIFRSand SOCPASpecialTopics
Consolidatedandseparatefinancialstatements Minorityinterest SOCPAAccountingStandards IFRS
Shallbepresentedasaseparate componentoftheequitysection Shallbepresentedwithinequity separatelyfromtheparentshareholders equity

70

70

KeydifferencesbetweenIFRSand SOCPASpecialTopics
RelatedParties SOCPAAccountingStandards
Transactionorientede.g. disclosuretoidentifycontrolling partynotneededaslongasthere werenotransactions Externalauditorisalsoarelated party Nomentionofdisclosurefor managementcompensation
71

IFRS
Relationshipsbetweenaparentandits subsidiariesshallbedisclosed irrespectiveofwhethertherehave beentransactionsbetweenthem. Externalauditorisnotarelatedparty Detaileddisclosuresrequiredforall typesofmanagementcompensation
71

KeydifferencesbetweenIFRSand SOCPASpecialTopics
Agriculture SOCPAAccountingStandards
Doesnotallowthesamethrough oneofitsopinion

IFRS
Measurebiologicalassets/producing cattle(noncurrentassets)atfairvalue

72

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CONCLUSION
73

EndNote
Transparencyandintegrityoffinancialreporting isessentialforfinancialstabilityandgrowth. Effectivefinancialreportingdependsnotonlyon highqualityaccountingstandardsbutalsoon theconsistentandfaithfulapplicationofthose standards. Thefinancialcriseshavefurtherstrengthened thecaseforconvergenceofglobalfinancial reportingstandards.
74

Thankyou Questions&Comments asifiqbal@socpa.org.sa Theviewsexpressedinthispresentationarethoseof thepresenter.OfficialpositionsoftheSOCPAare determinedonlyafterextensivedueprocessand deliberation.

75