IFRS ACCOUNTING FOR REAL ESTATE
INTRODUCTION TO REAL ESTATE ACCOUNTING
Real Estate accounting is not the same thing as financial accounting. Real Estate accounting demands a holistic approach, which requires strict compliance with all the relevant provisions prescribed by the International Financial Reporting Standards (IFRS). The core Standards applicable to Real Estate include:
- IAS 40—Investment Property
- IAS 16—Property, Plant, and Equipment
- IAS 2—Inventory
- IFRS 16—Leases (formerly IAS 17)
- IFRS 15—Revenue from Contracts with Customers (which merges what was formerly Revenue (IAS 18) with The Construction Contract (IAS 11) and all the previous Interpretations (IFRICs) on Revenue
To know the appropriate Standards and policies to apply in any given transaction, one must answer the following questions:
- Is the Property meant for Sale?
- Is it meant for Operating or Finance Lease?
- Who owns the Property?
Apart from accounting for Investment Properties meant for sale or lease, Real Estate firms that are also engaged in the construction of Real Estate projects are required to comply with IFRS 15 in accounting for these projects—from Work-in-Progress to their completion.
Real Estate accounting is so onerous that only a handful of companies can boast of financials and disclosures that are close to meeting the requirements of the IFRS. And those few who can do so have had to spend heavily on premium software solutions. The rest, which constitutes about 90% of the industry, have only two choices:
- Embrace the crude and messy drudgery of manual record-keeping, or just forget about accounting—after all, money is coming in regularly (quite a dangerous thing to do).
- Acquire one or more non-standard and incompatible software and live with all the confusion and stress of manual reconciliation and multiple updates.
In most of the cases we have come across, there is always a disconnect between property finance and property administration. This disconnect has given rise to duplication of roles, delays, and errors in information processing. We are also aware of the disillusionment of many, who have been scarred or bruised because of failed systems that ended up making matters worse.
About five years ago, we set out on the task of demystifying Real Estate accounting, soon after Nigeria adopted the International Financial Reporting Standards (IFRS). Today, we can gladly and proudly announce to you that we have succeeded in achieving exactly what we set out to achieve. The result of our four-year quest is what we call ExpressBook iPMA.
REAL ESTATE ACCOUNTING WITH EXPRESSBOOK iPMA
What is ExpressBook iPMA?
ExpressBook iPMA is an integrated IFRS-compliant Real Estate accounting and Property Management software. The software is customised and automated to deliver full classification, measurement, and recognition, in accordance with all the provisions for Real Estate accounting, as prescribed by the IFRS. The system comes loaded with a standard chart of accounts template for the Real Estate, an array of financial analyses, and administrative tools required for the effective management of Real Estate properties under different portfolios.
ExpressBook iPMA will enable you to account faithfully for your property Construction Work in Progress and automatically move your finished construction projects from Work-in-Progress to Inventory (for Sale) or Investment Property (for Leases).
ExpressBook iPMA comprises the following integrated primary modules:
Real Estate Module
- Property Control Parameters
- Property Construction (from Work in Progress to final transfer)
- Property Registration and Management
- Tenancy Details
- Operating Lease Accounting, Administration & Control
- Finance Lease Accounting
- Sales
- Property Maintenance
Bundled as part of the Real Estate module are advanced financial analysis tools, which include:
- Future Value Calculator (with Annuity)
- Sinking Fund Factor (SFF) and Sinking Fund Calculator
- Present Value Calculator (with Annuity)
- Internal Rate of Return (IRR)
- Discounted Cash Flow (for Property Evaluation and cash flow projection)
- Mortgage Loan Calculator and Schedule
Accounts Module
- Cashbook
- Accounts Payable
- Accounts receivable
- Inventory
- Fixed Assets
- Journals
- Periodicals
- Budget
The Accounts module comprises the General Ledger, which includes a standard chart of accounts template the Real Estate. Apart from the primary modules listed above, there are several tools and utilities to handle various tasks with ease. The system also comes with standard IFRS financial statements and sundry financial and administrative reports, with the option of exporting data to Excel. PDF, Word, and other formats.
Seamless Integration…
The integration of Real Estate with the General Ledger means all financial transactions are recorded once, irrespective of the module in which such transactions are recorded. Thus, Rental Income, Service Charge, Maintenance Expense, etc., are automatically recognised in the General Ledger.
For urgent enquiry, call any of the following numbers:
+234 (0) 09132312209 (Abuja); (0) 803422659 (Lagos).