Wishing all alumni, clients and staff a smooth year end 2015

Tax Guide 2014-15

The KPMG MENASA Tax Guide - from Morocco to Bangladesh the region is open for business
http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Pages/2014-2015-menasa-tax-guide.aspx

Auditing Whats Involved?

NEWS
Fighting erupted in South Sudan's capital, Juba, in mid-December 2014 triggering clashes throughout much of the country. Several ceasefire agreements and ongoing negotiations have failed to bring an end to the conflict. Disagreements over many aspects of the July 2011 division of Sudan and South Sudan, notably border delineation, look set to continue, but the two countries will try to maintain general co-operation.  Sudan's real GDP is expected to grow by an average of 3.7% in 2015-19 (Source EIU).

Really JCB digger beats the 70mph barrier

Big Race Weekend

Watch Lewis Hamilton overtake Nico Rosberg at the start of the Abu Dhabi Grand Prix: http://t.co/YtWo4IAE8N pic.twitter.com/6WQIklAVlC
— BBC Sport (@BBCSport) November 23, 2014

Race Report: Lewis Hamilton wins the 2014 Drivers' Championship after victory in #AbuDhabiGP http://t.co/KO1QFDsby1 pic.twitter.com/qmr9GEv5CA

— IndySport (@IndySport) November 23, 2014

Lewis Hamilton wins the #AbuDhabiGP and the 2014 Drivers' Championship http://t.co/1dUpfw34VL pic.twitter.com/3P7NIXQCk3

— IndySport (@IndySport) November 23, 2014

Saudi Arabia - new Zakat regulations

Saudi Arabia – Shura Council approves new Zakat regulations In June 2014, the Saudi Shura Council approved draft regulations on the calculation and collection of Zakat on commercial and professional activities. Among other changes, the regulation imposes Zakat on immovable properties and real estate held for trading or leasing purposes, including vacant or developed land, regardless of whether such properties are owned by individuals or legal entities. This change aims to encourage traders holding properties for trading (i.e. speculation) to sell these properties, as they will have to pay the Zakat even if no sale occurs. The supply of land would then increase and the prices would be reduced. Other elements of Zakat base include, among other things: cash and bank deposits gold and silver stock of goods and raw materials investment in financial securities kept for trading receivables from others, if they resulted from cash lending or trading non-trading investments in sukuks (Islamic bonds) and debt securities. Fixed assets are not included in Zakat base. Zakat applies at the rate of 2.5 percent, and its taxable period is the Hijri (lunar) year. For Zakat payers wishing to adopt the Gregorian year, the rate is 2.577 percent. The Regulations are pending the approval of the Council of Ministers.

Middle East - Asia investment. China a key player

China to double Iranian investment http://t.co/jxs1eHfQRj

— BBC News (World) (@BBCWorld) November 16, 2014

FOCUS: Investment in Sudan

Sudan KPMG Country Profile

National Investment Encouragement Act 2013

http://images.mofcom.gov.cn/sd/201304/20130423150140234.pdf

Regarding the requirement for a local involvement 

Section 8 reads

Prohibition of Discrimination between Projects 

8- (1) For the purpose of this Act, no discrimination shall be made between the investors as being 

Sudanese, or non- Sudanese, or as being public, private sector, co-operative or joint sector. 

(2) No discrimination shall be made between similar projects in similar areas in respect of granting 

concessions and guarantees. 

Notes

1. The government eliminated the Ministry of Investment in December 2011 and replaced it with a High Council on Investment.

2.  Sudanese investment law states that “just compensation” must be offered in the case of nationalization or confiscation of all or part of any investment for “the public interest.” 

3.  Performance Requirements/Incentives

Investors must begin their projects within six months of receiving a license, submit reports every six months during the period in which the project receives special privileges, keep regular books and maintain records on the assets of the project exempted from customs duties, and exempted imported materials, and present, to the Minister, the Competent Minister and the State Minister, annually, during the period of validity of the privileges, a copy of the annual report of the project, approved by a certified auditor.

Sudanese investment law specifies certain sectors as strategic for the purpose of providing additional or special incentives: (1) infrastructure, including roads, ports, electricity, dams, communications, energy, transport, contracting business, education, health and tourist and information technology services and water projects; (2) natural resource extraction and exploitation; and (3) agriculture and industrial production.

Investments in strategic sectors are exempt from tax on profits for a period of ten years. The High Council on Investment may grant non-strategic investments an exemption of five years. The government may also extend benefits including free land and exemptions from other taxes and fees to strategic and non-strategic investments. Such projects may include, but are not limited to, investment in the least developed areas of the country; investments that assist in the development of export capabilities; investments that contribute to rural development; investments that increase employment; investments that are charitable in nature; and investments that develop scientific and technological research.

4.  Foreign Trade Zones/Free Ports

Sudan has established two free trade zones: Suakin on the Red Sea near Port Sudan and Aljaily near Khartoum. According to the Free Zones and Free Markets Law of 1994, industrial, commercial or service investments which are licensed in the free zones enjoy the following advantages:

-- Exemption of the projects from tax on profits for 15 years, renewable for an extra period dependant on the decision made by the concerned minister;

-- Salaries of expatriates working in projects within the free zones are exempted from personal income tax;

-- Products imported into the free zone or exported abroad are exempted from all customs fees and taxes except service fees and any other fee imposed by the board of the Sudan Free Zones Company;

-- Real estate inside the free zones area is exempted from all taxes and fees;

-- Invested capital and profits are transferable from Sudan to abroad through any bank licensed to operate in the free zone;

-- Money invested in the free zones may not be frozen or confiscated.

Source

http://www.state.gov/e/eb/rls/othr/ics/2012/191239.htm

FOCUS: The work of Crown Agents in Sudan and South Sudan

What we do in Economic Development

We help countries grow their economies, strengthen their health systems and improve financial management. We do this by providing consultancy and training in health systems strengthening, trade and growth, public private partnerships, public financial management and governance. We are one of the world's leading experts in public procurement and supply chain management and we provide financial services to facilitate development, focusing on international payments and cash management, trade finance and investment management for donors, NGOs and financial institutions.

find out more

SUDAN

Crown Agents has worked in Sudan for the past 40 years, assisting public bodies such as Sudan Railways, the Finance Ministry, and the Central Bank. We provide a full range of services, including supply chain services, public financial management, international banking and training. Our work has included arranging for the transportation of vehicles and equipment for use by African peacekeepers in Darfur and reforming the humanitarian system through the Sudan Common Humanitarian Fund.

SOUTH SUDAN

We have been supporting the government of the Republic of South Sudan to build a strong and effective state since the country’s independence on 9 July 2011.  In partnership with the new government, donors and other organisations, such as DFID and TradeMark East Africa, our public financial management, supply chain and consultancy expertise is supporting a number of projects.

Our customs administration reform and capacity building efforts have helped boost the post-conflict country’s revenue by 1,100 per cent.  We are also managing the Health Pooled Fund, which is the country’s largest health sector project, to ensure the delivery of essential health services to citizens and transfer ownership of the health system from NGOs to the government in six of the country’s ten states.

TRAINING

Public financial management systems are essential for the implementation of government policies and achievement of developmental objectives.
 

This course explores the fundamentals of governance reforms and the key issues and solutions across the PFM landscape including budget preparation and execution, accounting, monitoring and evaluation, performance measurement and auditing.

It also explains management theories and strategic planning frameworks essential to understanding the current issues and trends in integrated PFM reforms.

What the the DFID 2011-15 programs in South Sudan?

Inflation in Sudan and IAS 29

Inflation in Sudan - interactive chart

Inflation in Sudan worksheet
https://docs.google.com/spreadsheets/d/1D1t2OpT9E37zM1U49crn5f9Lt3pmUd6UiJJ_qdYfHWM/edit?usp=sharing

At 6 pages IAS29 is one of the briefest accounting standards. It should be read in the context of the Basis for Conclusions. IAS8 Accounting policies, changes in accounting estimates and errors provides a basis for selecting and applying accounting policies in the absence of explicit guidance.  The standard makes reference to current cost accounting which became common among plcs in the UK in the 1980s. see also SIC 19, SIC 30.

Learning. 
AEBB Slideshow introduction to IAS29
As ever there is no substitute for reading what the Standard actually says. The procedures described therein are pretty clear and its possible to construct a simplified spreadsheet.  Worked example. Bear in mind the objective of expressing the statement of financial position (and the comparatives) in terms of the Purchasing Power at the balance sheet date. In theory a shareholders equity is the value of the goods and services he can buy with that equity. The net profit should represent the increase or decrease that value of equity in terms of purchasing power at the reporting date.

There are plenty of interesting issues around inflation accounting.  The change in exchange rates compared to a stable currency can be differant from the change in CPI (consumer price index) but for consistency of comparison its best to stick to CPI.

Set out below is the Consumer Price Index for Sudan. Source Central Bureau of Statistics
http://sudandataportal.org/

Sudan Consumer price index composition

Objectives

• Explain when an economy is deemed hyperinflationary and identify the circumstances in which IAS 29 must be applied.

• Explain the restatement effect on current and prior year financial statements.

• Prepare financial statements applying the hyperinflation principles.

IAS 29 Financial Reporting in Hyperinflationary Economies

as issued at 1 January 2012.

This Standard shall be applied to the financial statements, including the consolidated financial statements, of  any entity whose functional currency is the currency of a hyperinflationary economy. This Standard does not establish an absolute rate at which hyperinflation is deemed to arise. It is a matter of judgement when restatement of financial statements in accordance with this Standard becomes necessary.

Hyperinflation is indicated by characteristics of the economic environment of a country which include, but are not limited to, the following:

(a) the general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency. Amounts of local currency held are immediately invested to maintain purchasing power;

(b) the general population regards monetary amounts not in terms of the local currency but in terms of a relatively stable foreign currency. Prices may be quoted in that currency;

(c) sales and purchases on credit take place at prices that compensate for the expected loss of purchasing power during the credit period, even if the period is short;

(d) interest rates, wages and prices are linked to a price index; and

(e) the cumulative inflation rate over three years is approaching, or exceeds, 100%. The financial statements of an entity whose functional currency is the currency of a hyperinflationary economy shall be stated in terms of the measuring unit current at the end of the reporting period. The corresponding figures for the previous period required by IAS 1 Presentation of Financial Statements and any information in

respect of earlier periods shall also be stated in terms of the measuring unit current at the end of the reporting

period.

For the purpose of presenting comparative amounts in a different presentation currency, paragraphs 42(b) and 43 of IAS 21 The Effects of Changes in Foreign Exchange Rates (as revised in 2003) apply.

The restatement of financial statements in accordance with this Standard requires the application of certain procedures as well as judgement. The consistent application of these procedures and judgements from period to period is more important than the precise accuracy of the resulting amounts included in the restated financial

statements. The restatement of financial statements in accordance with this Standard requires the use of a general price index that reflects changes in general purchasing power. It is preferable that all entities that report in the currency of the same economy use the same index.

When an economy ceases to be hyperinflationary and an entity discontinues the preparation and presentation of financial statements prepared in accordance with this Standard, it shall treat the amounts expressed in the

measuring unit current at the end of the previous reporting period as the basis for the carrying amounts in its subsequent financial statements.

Notes

Scope

1. Functional currency. Hyperinflationary economy.
2. Not useful without restatement. Comparison of amounts.
3. The cumulative inflation rate over three years approaches or exceeds 100%
4. from the beginning of the accounting period.

The restatement of financial statements

5. Prices change. Supply of money.
6. Historical basis. Fair value. Current cost approach.
7. Expressed in terms of the measuring unit at the end of the period. Supplement not permitted.
8. Corresponding figures for previous period. Different presentation currency.
9. Gain or loss included in P&L and separately disclosed.
10. Procedures as well as judgement. Consistency more important than accuracy.

Historical cost financial statements

Statement of financial position

11. Amounts not expressed in terms of the measuring unit are restated by applying a general price index.
12. Monetary items not retated. Cash. Receivables. Payables.
13. Index linked items are adjusted in accordance with the agreements
14. All other assets and liabilities are non monetary. Some non monetary items carried at net realisable and fair value so not restated.
15. Most non monetary items are carried at cost or cost less depreciation
16. Property, plant and equipment, inventories, Goodwill is restated from the date of purchase. Inventories of partly finished and finished inventory are restated from the date of their purchase and conversion.
17. If index not available use movement in exchange rate of the functional currency to the stable currency.
18. If revalued carrying amounts revalued from the date of revaluation.
19. Restated amount of non-monetary item reduced if it exceeds recoverable amount. Restated amounts of property, plant and equipment , goodwill, patents and trademarks are reduced to recoverable amount. Restated amounts of inventories are reduced to net realisable value.
20. Investee accounted for under the equity method. Restated financial statements of the investee are translated at closing rates.
21. Borrowing costs
22. Impractical to impute the amount of interest.

24 At beginning of first period of application owners equity other than retained earnings  restated

25 At the end of the first period all are restated

Statement of comprehensive income

26 All items expressed in terms of currency at the end of the period.

Gain or loss on net monetary position

27 monetary assets in excess of monetary liabilities loses purchasing power if unlinked to a price level.

Non monetary items

Owners equity

Items in the statement of comprehensive income

Current cost financial statements

29-34

Consolidated financial statements

35, 36

Selection and use of a general price index

Ceasing

38

Disclosures

39

40

41

References to links/case studies
IAS29 worked example
http://www.drsc.de/docs/DIFRIC5.pdf

Sudans inflation in
August 2014
September 2014

September 2013 347.03
September 2014

Islamic Banking at KPMG

KPMG Today: Morning chorus @ianbrealey: KPMG Global Islamic Banking Group http://t.co/v5z6S4GpoW…
— KPMG Today (@KPMG_TO) October 29, 2014

London is an unheralded centre of Islamic finance http://t.co/CycKpwIGSN
— peter i brealey (@KhartoumFCA) October 29, 2014

Islamic banking perceptions https://t.co/SwYh3yoOZB
— peter i brealey (@KhartoumFCA) October 29, 2014

KPMG Global Islamic Finance Guide

https://www.kpmg.com/ZA/en/IssuesAndInsights/ArticlesPublications/Financial-Services/Documents/IF_BROCHURE.pdf

KPMG Islamic finance reporting through IFRS

http://www.accaglobal.com/content/dam/acca/global/PDF-technical/financial-reporting/pol-afb-gabc.pdf

Useful lecture providing a 40 minute overview of Islamic Banking and Finance

https://www.youtube.com/watch?v=P_cVuLpD_rs


Online training
http://auscif.com/

Sheikh Hacene Chebbani was born in Algeria and has been living in Canada since 1997. Sheikh Hacene has completed a Master's in Islamic finance (2012) from UK. In 1993 he graduated in Sharīah (BA) from the Islamic University of Madinah. While there he took the opportunity to study Aqīdah, Fiqh and Hadīth 
RIBA
Fiqhi debate part 1
Fiqhi debate part 2
Fiqhi debate part 3
Fiqhi debate part 4
Fiqhi debate part 5
Ijarah (rent to own, leasing) RIBA
Islamic Finance part 1

Business ethics

Islamic finance part 2

Fiqh of Business transactions

Islamic Finance part 3

Fiqh of Business Transactions Contracts of Sale

Islamic Finance part 4
Transaction types
Islamic Finance part 5
Musharaka
Islamic Finance part 6
Murabaha
Islamic Finance part 7
Mudaraba
Islamic Finance part 8
FOREX
Foreign exchange trading

Islamic Finance seminar
The videos taken of the seminar:
http://youtu.be/QjpwG6JxWeI
http://youtu.be/FbZJD4yge1U
http://youtu.be/wmwFnLcTzwA
http://youtu.be/8AN7-NSrch4
http://youtu.be/oIpGvedKQGg

Zakat tax seminar
Part 1
Questions and answers
Part 2

Global Capital
What to watch out for in 2014

Comment on falling Oil Prices

ACCA Learning Framework

Learning Framework
F1	ISA200	IFRS1	IAS1
F2	ISA210	IFRS2	IAS2
F3	ISA220	IFRS3	IAS7
F4	ISA230	IFRS4	IAS8
F5	ISA240	IFRS5	IAS10
F6	ISA250	IFRS6	IAS11
F7	ISA260	IFRS7	IAS12
F8	ISA265	IFRS8	IAS13
F9	ISA300	IFRS9	IAS16
P1	ISA315	IFRS10	IAS17
P2	ISA320	IFRS11	IAS18
P3	ISA330	IFRS12	IAS19
P4	ISA402	IFRS13	IAS20
P5	ISA450		IAS21
P6	ISA500		IAS23
P7	ISA501		IAS24
	ISA505		IAS26
	ISA510		IAS27
	ISA520		IAS28
	ISA530		IAS29
	ISA540		IAS32
	ISA550		IAS33
	ISA560		IAS34
	ISA570		IAS36
	ISA580		IAS37
	ISA600		IAS38
	ISA610		IAS39
	ISA620		IAS40
	ISA700		IAS41
	ISA705
	ISA706
	ISA710
	ISA720
	ISA800
	ISA805
	ISA550
	ISQC1

IFRS

Find out more at eIFRS

Unaccompanied IFRS

• IFRS 1 First-time Adoption of International Financial Reporting Standards
• IFRS 2 Share-based Payment
• IFRS 3 Business Combinations
• IFRS 4 Insurance Contracts
• IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
• IFRS 6 Exploration for and Evaluation of Mineral Resources
• IFRS 7 Financial Instruments: Disclosures
• IFRS 8 Operating Segments
• IFRS 9 Financial Instruments
• IFRS 10 Consolidated Financial Statements
• IFRS 11 Joint Arrangements
• IFRS 12 Disclosure of Interests in Other Entities
• IFRS 13 Fair Value Measurement

Unaccompanied IAS

• IAS 1 Presentation of Financial Statements
• IAS 2 Inventories
• IAS 7 Statement of Cash Flows
• IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
• IAS 10 Events after the Reporting Period
• IAS 11 Construction Contracts
• IAS 12 Income Taxes
• IAS 16 Property, Plant and Equipment
• IAS 17 Leases
• IAS 18 Revenue
• IAS 19 Employee Benefits
• IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
• IAS 21 The Effects of Changes in Foreign Exchange Rates
• IAS 23 Borrowing Costs
• IAS 24 Related Party Disclosures
• IAS 26 Accounting and Reporting by Retirement Benefit Plans
• IAS 27 Separate Financial Statements
• IAS 28 Investments in Associates and Joint Ventures
• IAS 29 Financial Reporting in Hyperinflationary Economies
• IAS 32 Financial Instruments: Presentation
• IAS 33 Earnings per Share
• IAS 34 Interim Financial Reporting
• IAS 36 Impairment of Assets
• IAS 37 Provisions, Contingent Liabilities and Contingent Assets
• IAS 38 Intangible Assets
• IAS 39 Financial Instruments: Recognition and Measurement
• IAS 40 Investment Property
• IAS 41 Agriculture

IFRS for SMEs

• IFRS for SMEs (Basis for Conclusions)
• IFRS for SMEs (Illustrative Financial Statements, and Presentation and Disclosure Checklist)
• IFRS for SMEs (Standard)
• Exposure Draft: IFRS for SMEs®: Proposed amendments to the International Financial Reporting Standard for Small and Medium-sized Entities
• Exposure Draft: IFRS for SMEs®: Basis for Conclusions
• IFRS for SMEs (Illustrative Guidance: A Guide for Micro-sized Entities Applying the IFRS for SMEs (2009))

IFRIC interpretations

• IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities
• IFRIC 2 Members' Shares in Co-operative Entities and Similar Instruments
• IFRIC 4 Determining whether an Arrangement contains a Lease
• IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
• IFRIC 6 Liabilities arising from Participating in a Specific Market—Waste Electrical and Electronic Equipment
• IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies
• IFRIC 10 Interim Financial Reporting and Impairment
• IFRIC 12 Service Concession Arrangemnts
• IFRIC 13 Customer Loyalty Programmes
• IFRIC 14 IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
• IFRIC 15 Agreements for the Construction of Real Estate
• IFRIC 16 Hedges of a Net Investment in a Foreign Operation
• IFRIC 17 Distributions of Non-cash Assets to Owners
• IFRIC 18 Transfers of Assets from Customers
• IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
• IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
• IFRIC 21 Levies

SIC interpretations

• SIC-7 Introduction of the Euro
• SIC-10 Government Assistance—No Specific Relation to Operating Activities
• SIC-15 Operating Leases—Incentives
• SIC-25 Income Taxes—Changes in the Tax Status of an Entity or its Shareholders
• SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease
• SIC-29 Service Concession Arrangements: Disclosures
• SIC-31 Revenue—Barter Transactions Involving Advertising Services
• SIC-32 Intangible Assets—Web Site Costs