ACCA – Wolters Kluwer Joint Event: Accounting for Construction Contracts under FRS 115 (incorporating the Impact of COVID-19 and Deficiencies flagged by ACRA)

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Description

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Entities in the construction industry have previously followed FRS 11 Construction Contracts that contained specific guidance for the recognition of revenue from construction contracts. This has now been replaced by a more complex revenue standard FRS 115 Revenue from Contracts with Customers.

FRS 115 is difficult to apply for the construction industry due to the complex nature of its contracts. It is far more complex than the old FRS 11, and can significantly alter the pattern of revenue recognition and pattern of profit for the construction industry. It is not a mere accounting change but will has widespread implications to other business areas.

The workshop will discuss the additional complexities for accountants who prepare financial reports for construction entities in addition to potentially changing the pattern of revenue recognition. Auditors who need to audit construction contracts will also find this workshop relevant.

In this timely and practical workshop, we will also discuss COVID-19’s accounting impact on construction contracts and the common audit deficiencies picked up by ACRA in the area of construction contracts.

Programme Outline

Overview

• The Revenue from Contracts with Customers Project

5 Steps to Revenue Recognition

• Identify the contract with the customer
• Identify the separate performance obligations in the contract
• Determine the transaction price
• Allocate the transaction price
• Recognise revenue when a performance obligation is satisfied

Recognition of revenue

• Identifying the contract
• Can construction contracts be combined for accounting purposes?
• Accounting for variation orders and modifications

Question 1

• Identifying separate and distinct performance obligations in construction contracts
• Satisfaction of performance obligations
• Performance obligations satisfied over time – input and output methods

Question 2, 3, 4

• Performance obligations satisfied at a point in time

Measurement of Revenue

• Determining the transaction price
• Variable consideration including incentive payments
• The time value of money

Question 5

• Non-cash consideration

Components of contract costs

• Costs that must be excluded from cost of construction contracts
• Costs that can be capitalized as work in progress
• Recognition of expected losses

Question 6

• Revenue Recognition for Sale of Uncompleted Residential Properties in Singapore

COVID-19 Considerations for Accounting for Construction Contracts

Audit Deficiencies in Construction Contracts picked up by ACRA

Presentation and Disclosure

This workshop qualifies for 7.0 CPE hours in Financial Reporting Standards and Pronouncements (Category 1).

Target Audience

Accountants and Auditors who would like to have a practical understanding of the Accounting for Construction Contracts under FRS 115

Expert Speaker

Sardool Singh

Sardool is an Adjunct Associate Professor in the Department of Accounting of the NUS Business School. He has been lecturing for the past 20 years, and is a highly sought-after seminar leader in the areas of Financial Reporting Standards, Cash Flow Statements, Analysis of Financial Statements, Consolidation and other technical accounting topics.

Sardool brings a commercial perspective to the understanding of complex Accounting Standards and simplifies the requirements of these Standards to enable the participants to have a clear understanding of the topic.

Sardool is also the Chief Financial Officer of an investment company. Prior to his current appointment, he was the Group Financial Controller of a Singapore listed healthcare company. During his ten years in the healthcare industry, he was responsible for the entire Group financial functions and the IPOs of two subsidiaries on SESDAQ. He had also gained his working experience with KPMG Peat Marwick and a Japanese merchant bank.