Published on February 07, 2014, Manila Standard Today:
Written by Roger M. Garcia
The Securities and Exchange Commission has set the date to meet with real estate development firms as it tackle the issues on the changes in the operations and accounting systems for property developers and builders in the country.
The Organization of Socialized Housing Developers of the Philippines, Inc. (OSHDP) has organized a symposium for private property development firms as it sought clarification from the government’s regulatory agency on key issues and related concerns involved in the implementation of The International Financial Reporting Interpretations Committee (IFRIC) 15.
SEC Commissioner Teresita J. Herbosa, SEC chairperson will discuss specific guidelines and related rules on the said system of reporting.
The new rule will primarily require real estate developers to specify the nature of their contract with homebuyers. The SEC is currently preparing rule changes, including a range of definition of violations to the Corporation Code and its corresponding criminal penalties.
Lawyer Christopher Ryan T. Tan, OSHDP President said the meeting is open to all stakeholders of the industry particularly private development firms.
In a statement, Tan said that “there is a choice whether the developer is delivering a completed housing project/unit, or a contract of service.
“The distinction, which would require changes in a developer’s operations and accounting system, will spell the difference whether the developer can recognize revenues from its project on an annual basis, or only after completion/delivery, which could take two years or more”, Tan emphasized.
“Moreover, failure to comply with IFRIC 15 could also hamper a subdivision developer’s operations and its ability to access bank financing for its residential projects” Tan explained.
Engr. Jefferson S. Bongat, OSHDP chairman meanwhile said that IFRIC 15 will cover new real estate projects to be rolled out in 2015, but changes in the developers’ accounting practice will have to be made this year (2014).
OSHDP has invited businessman Bansan Choa to present the views and position of practicing real estate developers on the new set of rules by SEC.
The housing developers group announced that the symposium will be held at the Metropolitan Club, Amapola & Estrella Sts., (across Rockwell Plaza), Makati City on February 26, 2014 at 1:00 – 4:00 p.m. For reservations, please contact OSHDP Secretariat at tel. nos. 721-0039/994-8092; or via e-mail firstname.lastname@example.org.
IFRIC 15 standardizes accounting practice across jurisdictions for the recognition of revenue by real estate developers for sales of units, such as apartments or houses, ‘off plan’ – that is, before construction is complete.
The fundamental issue is whether the developer is selling a product (goods) – the completed apartment or house – or is selling a service – a construction service as a contractor engaged by the buyer. Revenue from selling products is normally recognized at delivery. Revenue from selling services is normally recognized on a percentage-of-completion basis as construction progresses.Source: IAS Plus