Has it ever crossed your mind as to why Accounting is considered as the backbone of a business? Accounting has been properly defined as the process of recording, classifying, summarizing, analyzing and interpreting, the financial transactions and communicating the results thereof to the parties interested in such information. As an international investment hub, the country has encouraged the contracting/ construction sector with large mega-projects. Accounting for contracting companies can help them with an increase in social infrastructure for the preparation of the Expo2020. The U.A.E has recorded the highest construction project value in both commercial and residential areas. The country always provides for a stable economy, investment opportunities & corruption free experiences for all the emerging and existing businesses. With the introduction of the tax in the U.A.E and the mandatory clause to keep all records for a period of five years along with periodic submission of tax returns, no company shall escape from maintaining a proper accounting system i.e., Accounting and Bookkeeping. The art of Bookkeeping could be maintained by a common man but the art of accounting invites for a professional accounting firm to systematically assist the owner of business along with the top management with proper analytical reports and budgets for controlling the cost and leading the business/ projects into profit.
For a startup company, the operational cost has to be reduced and funds have to be wisely allocated into long term investments. In these situations, a professional accountant will guide the company to analyze the longer-term trends, risks and opportunities for timely investments. Let us consider an example, as a startup company, the expert advice of the professional accountant would be necessary for some cost factors like the hiring of manpower or in-house, Lease equipment or purchase etc. which require decision making based on the available funds.
The companies in this sector of the industry revolve around handling various projects, subcontractors, hiring of equipment, related inventories, manpower etc. Accounting for contracting companies should mainly focus on payments for subcontractors, budgeting, cost control and study on variance analysis, project wise cost and related work completion. The FASB (Financial Accounting Standards Board) and IASB (International Accounting Standards Board) issued a converged standard on revenue recognition entitled revenue from contracts with customers (IFRS 15 and ASC 606)
The below mentioned five steps have to be satisfied with the revenue recognition for the contracting companies.
STEP 1: Identify the contract with the customers which includes:
STEP 2: Identify the separate performance obligations in the contract
STEP 3: Determine the transaction price
Amount of consideration for transferring goods and services to the customer are considered they are:
STEP 4: Allocate the transaction price to the separate performance obligations
Price could be allocated separately using a reasonable approach: (3 methods)
STEP 5: Recognize the Revenue when each separate obligation is satisfied
The point where the supplier decides
The revenue has to be calculated based on the percentage of completion of the project/contract and here arises the requirement for expert advice from a professional accountant.
CDA offers quality accounting services for contracting companies in Dubai and UAE. We provide comprehensive accounting services and strive to understand your business needs and long-term goals and provide tailor-made solutions to meet all your business requirements. Our wide variety of accounting services in Dubai comprise Account Reconciliation Services, Updating of Backlog Accounts Services, Bookkeeping Services, Financial Restructuring Services. Which includes:
1. Accounting and Bookkeeping Services
2. Business Advisory Services
Business advisory services emphasis on making strategies for the success and growth of a business. Our business advisory services include: Set up operational plans, marketing plan, financial plans, etc. to develop your business and see that it runs on the right track.
Our experts participate in the formation and implementation of company financial plans through cost-benefit analysis, cash flow analysis and on-time report submission to the management for decision making.
4. Internal Audit Services
CDA experts help in the planning and preparation of methodologies that are concentrated on the efficient utilization of an entity’s resources, which aid the manager in augmenting the shareholder and company value. Our internal audit services focus on implementing and monitoring internal control procedures as per IFRS, after reviewing the operations of the company.
5. External Audit Services
The external audit is organized to see the precision of the statements and the financial position of the company. We check the compliance of accounts with International Financial Reporting Standards (IFRS), according to the Financial Accounting Foundation and scrutinize the records for financial misstatements to prepare financial reports on corporate ethics.
6. Tax Consultation with VAT File Return
Under TAX services we perform Tax Audit at regular intervals to make sure that the Tax is properly recorded as per the FTA requirements. Monitoring and review of Executive VAT Summary complied with FTA rules and regulations along with the filing of the VAT return.
CDA has unique insights in handling the clients from the general contracting industry and ensures their financial stability in the long run. Our passionate and skilled professionals advise in taking smart decisions for the success of the contracting company. We create a clear understanding of your accounting and financial statements which helps you to reduce the tax burden to a great extent and to comply with the tax laws in the contracting industry. Our client portfolio is evidence of our excellent accounting services for contracting companies.
“Thank you so much for rendering the services as we expected. I really want to appreciate the work and concerns. Overall highly pleased and recommended.”
Chin Ching Chai
Managing Director, Marine Expert Technical Services LLC
Cost Plus Contracts: The contracts in which the contract value is added with a certain percentage of profit under the inability to measure the exact costs.
Our consistent reach to customers service requirements and prioritized decision making helps in business success. Our expert team and their proactive business advice on accounting and tax compliance make us unique in this arena.
Our prices are in competitive nature, we charge 50% advance payment for all our services. Our monthly rates are based on accounting software used, company type, contract term, skill, experience and frequency of visit.
Contract revenue consists of the amount agreed in the initial contract, revenue from alternations in the original contract work, claims and incentive.
The advantages are accurate profit measurement, reduced tax liability.
We prefer Xero and Sage business cloud software due to its robustness in providing: Job Costing Reports, Work-In-Progress Reports and hundreds of other combined reports. Depending on customers preferences and needs we work with other systems too which is top in the market.
Yes, our team has well expertise and knowledge in IFRS 15 since it provides a comprehensive revenue recognition model for all contracts with customers.
Yes, we can capitalize the equipment purchased if the equipment’s useful life is more than one year.
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