Saudi companies to adopt IFRS under new CMA plan

Several companies, including National Gas and Industrialization Co. (GASCO) and Saudi Cement, are planning to adopt International Financial Reporting Standards (IFRS) under a new plan starting from Sept. 25.
Gasco has hired an external adviser for the transition, while an internal team was also appointed to supervise the process.
GASCO said that the first IFRS-based financial statements for Q1 and Q2 will be prepared by Oct.16, and Q3, 2016 financials will be finalized by Nov. 30.
The Saudi Capital Market Authority (CMA) recently called on listed firms to shift their accounting standards in line with IFRS.
The deadline for IFRS adoption has been set for Jan. 1.
The CMA explained that its decision to oblige listed companies on the stock market to disclose progress of transition to the IFRS endorsed by the Organization for Certified Public Accountants (SOCPA) in three stages came in consultation and coordination with participants in the stock market in order to urge companies to proceed with the application of the standards as of early 2017, according to the decision of SOCPA.
The disclosure of phases aims to verify the ability of listed companies to prepare financial statements in accordance with the IFRS before the due date. 
The phases include a group of disclosures related to the extent of the IFRS transition plan preparation by listed companies, and the appointment of an external consultant as well as the formation of an internal team responsible for the transition plan. 
Also, there are other disclosures that include the approval of accounting policies and identifying of constraints that may face the company, along with any significant effects as a result of the application of the IFRS. 
CMA indicated that a high steering committee has been formed to oversee the IFRS convergence by listed companies in order to follow the readiness of such companies for the IFRS transition and to address the challenges, which the companies may encounter.
The committee includes members with experience and competence from both inside and outside the CMA. 
One of the main steps taken by that committee is the recommendation of the companies' transition phases disclosure.
CMA considers that such disclosure would play a role in encouraging board of directors of listed companies toward accelerating the process in order to meet the requirements and to implement the transition plan, where the market conditions and the shareholders' interests can be achieved. It would also help CMA to support companies to surpass the challenges faced before the IFRS implementation date. 
CMA also indicated that those decisions emanate from the CMA's role in regulating and monitoring the works and activities of parties subject to the control and supervision of the CMA, and regulating and monitoring the full disclosures of information regarding financial securities and their issuers. 
As part of its efforts to spread awareness regarding the IFRS among listed companies and investors, CMA since Aug. 11 launched an awareness campaign via its social media accounts, aiming to introduce the IFRS, advantages of the IFRS convergence, and disclosures required by such standards.
The requirements of the IFRS differ from the Saudi standards that are currently applied. The campaign also provided other relevant information.
In the context of preparing for listed companies' implementation of those standards, CMA has also taken several steps. 
CMA sent a circular on Aug. 12, 2015, including the need to prepare a plan for the implementation of the IFRS. 
This plan must be completed before the end of 2015. 
Also, CMA sent a circular on Jan. 13, 2016, indicating the necessity for the company's board of directors 2015 and 2016 reports to include the IFRS transition plan's details, the implementation phases, and the extent to which the company is ready to apply the IFRS.

Source: Arab News