AI Executive Summary
Overview of accounting requirements for off-plan real estate sales in Saudi Arabia, focusing on CPA escrow account financial supervision and Wafi Committee completion-based disbursement approvals.
Essential guide for real estate developers on escrow account supervision and compliance with Wafi committee requirements in Saudi Arabia.
Regulatory Accounting Framework under the Wafi Committee & REGA
Accounting guidelines issued by the Real Estate General Authority (REGA) and the Wafi Committee safeguard buyer funds and enhance real estate sector trust in Saudi Arabia. Launching any off-plan sales project mandates appointing a licensed CPA firm for escrow account financial supervision.
Escrow Account Financial Supervision Controls
CPA escrow supervision duties encompass:
• Monitoring buyer and financier deposits into the project escrow account.
• Restricting developer drawdowns unless backed by certified engineering completion certificates.
• Auditing direct contractor and supplier payment applications.
• Submitting certified periodic financial reports directly through the Wafi portal.
IFRS 15 Revenue Recognition for Real Estate Developers
Applying Over Time revenue recognition based on actual incurred construction cost percentages ensures financial statement accuracy and shields real estate developers from earnings volatility.