http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.04Change: -0.16
R/$ = 12.07Change: -0.10
Au 1204.60 $/ozChange: 1.40
Pt 1170.50 $/ozChange: 4.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Oct 12, 2012

Revised revenue standard to affect construction sector firms

Back
Construction|Engineering|Africa|Building|Africa|South Africa|Services|Theunis Schoeman|Operations
Construction|Engineering|Africa|Building|Africa||Services||Operations
construction|engineering|africa-company|building|africa|south-africa|services|theunis-schoeman|operations
© Reuse this

The introduction of a new accounting standard from January 1, 2015, will require companies to identify separate performance obligations in a contract for accounting purposes.

The standard, although a relatively minor adjustment for most companies, assumes huge significance in the building, construction and civil engineering industries, where multiple performance obligations are more the norm than the exception.
PKF chartered accountants and business advisers director Theunis Schoeman says a revised exposure draft on revenue recognition was jointly published in November last year by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB), detailing the more onerous disclosure requirements with regard to contractual performance obligations.

“While these revisions will not affect business operations, they will inevitably create additional costs and require greater preparation of company financial statements. This brings South Africa in line with what is happening globally and is an element of the process of global harmonisation,” he explains.
He adds that while these requirements remain onerous, they are less radical than initially feared.

It appears from the revised draft that cognisance has been taken of the industry’s concerns that were based on the first draft.
“Notably, representations were made to consider aligning the implementation of financial instrument IFRS 9 with the revenue exposure draft. There also seemed to be a certain degree of conflicting principles relating to the accounting treatment for a receivable between the exposure draft and IFRS 9. Both these issues have been resolved,” Schoeman notes.
A key issue that was laid to rest in the exposure draft is the approach to capitalising bid costs, which has been historically inconsistent.

The draft clarifies that, where a company incurs incremental costs in obtaining a contract, these costs should be capitalised and therefore amortised over the period of the contract. Further, in the case of a contract that is valid for less than a year, these costs can also be entirely expensed within the period during which they are incurred.
Although the new standard, as outlined in the revised draft, is only scheduled to come into effect for yearly financial periods on or after January 1, 2015, it will have to be applied retrospectively in respect of prior years.

“As a result, I recommended that affected companies start implementing it for periods from January 2013 onwards to ensure they have that retrospective information at hand,” he says.
Several standards and interpretations will fall away with the new standard, including IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC 31 Revenue-Barter Transactions Involving Advertising Services.
Further, there will be exceptions for lease contracts in terms of IAS 17, insurance contracts in terms of IFRS 4, contractual rights or obligations in terms of IFRS 9 and nonmonetary exchanges between entities in the same line of business.
The revised exposure draft proposes a five-step model for determining when revenue should be recognised, based on the core principle that revenue is recognised when or as an organisation transfers control of goods and services to a customer.

Edited by: Martin Zhuwakinyu
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Construction News
Acting Transnet CEO Siyabonga Gama
Acting Transnet CEO Siyabonga Gama, who was appointed to the position following the surprise secondment of Brian Molefe to Eskom, has placed revenue diversification at the top of his list of immediate priorities, with the weak commodity outlook seen as having the...
Phase 3 construction of the Maclear Wastewater Treatment Works (WWTW) upgrade project, in the Eastern Cape’s Joe Gqabi district municipality, will start in June this year, says South African black-owned engineering firm Gibb, This phase will include the construction...
The construction of a 100 MW natural gas-fired power station at Ressano Garcia is progressing well, with the first of 13 power generation sets having arrived at the Gigawatt Park site on April 15. South African investment group and majority shareholder in the project...
More
 
 
Latest News
Updated 15 minutes ago Creamer Media’s Iron-Ore 2015 report provides an overview of the global iron-ore market, with particular reference to pricing, supply and demand, as well as the trade in iron-ore. It provides information on not only the major mergers and acquisitions, and the trade...
Top aluminium producer United Company Rusal will start producing metal at its Boguchansk project, in Russia, by June and will ramp up output over the following year depending on demand, the company's chief executive said on Monday. Weak aluminium prices are forcing...
Dubal Holding, the holding company for Dubai's stake in Emirates Global Aluminium and other assets, is considering possible acquisitions in local and international energy projects, it said on Monday. The firm was looking for equity interests related to coal, solar,...
More
 
 
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
 
 
 
 
 
This Week's Magazine
Sappi Southern Africa CEO Alex Thiel
Forest products group Sappi has confirmed the selection of its 25 MW biomass-to-power project, to be erected at its Ngodwana mill, in Mpumalanga, as a preferred bidder under the South African government’s Renewable Energy Independent Power Producer Procurement...
Information and communications technology (ICT) distributor DCC is making Windows- and Android-operating systems tablets available through retailers and education equipment suppliers to provide school children with affordable, high-performance education tools. The...
Another cement manufacturer is set to enter the Ugandan market, raising hopes that prices will come down and spur growth in the construction industry. National Cement, a Kenyan manufacturer, has unveiled plans to invest $195-million in a new manufacturing plant in...
With growth rates exceeding that in the developed world – at an average of between 4% and 5% between 2002 and 2014 – African countries provide investors with ample reason to tap into booming consumer demand says Manufacturing Circle executive director Coenraad...
The South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) decreased by 3.7 index points month-on-month to 89.1 in March.
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96