The transition to accounting standards

International IAS/IFRS

The completion of this report owes much to the valuable help and advice received from
our supervising teacher Mrs. Khadija ANGADE, who contributed to us with her suggestions
and critics.

We would particularly like to express our heartfelt thanks to the director of the
RAMSA Mr Mohamed FOUTOUHI for granting this internship opportunity.

We also express our sincere thanks to Mr. Saïd AMELLAL, head of

heritage service our internship supervisor for his support, his listening and his advice. As well as
the entire RAMSA team for their constant good humor and for their warm welcome.

We would also like to express our deepest thanks to our dear parents.
for their support and all the comfort they ensured for us to carry out this project of
end of study.

Our thanks also go to the teaching and administrative staff of

the ENCG of Agadir and to the members of the jury who grant us the honor of being willing to evaluate our

work. Finally, unable to name everyone, we present to all those who have
contributed closely or remotely to this work, our deep gratitude.

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Accounting rules play a key role in the organization and evolution of the system.
financing of companies and in the evaluation of their directly held securities or
indirectly by savers. This reality, often concealed, has been revealed in all its
evidence through the lively debates sparked by the adoption of IFRS since 2005. Indeed, companies
European listed companies will apply new accounting standards in their consolidated accounts.
the IFRS standards, which will have a certain impact on their accounts. These new IFRS standards
will allow investors to more easily compare listed European companies
between them and with other international companies that will apply these standards. In
immediately, this accounting change will alter the perception of certain listed groups in the
measure where their results, their debt, their equity may undergo
variations due solely to the change in standards.
The main innovative effect of these standards is an increased reliance on 'fair value'.
in the evaluation of many assets and liabilities of the company, in the sense that these elements will be
valued at their market value.
Another significant change relates to the principles of 'substance over form' and
of the economic reality of transactions, which prevails in IFRS standards, in relation to their
legal appearance. Specifically, this means that certain elements that the company controls
could be accounted for in the balance sheet without having legal ownership.
The balance sheet will therefore reflect the true value of the company more accurately, since IFRS standards are

primarily intended for investors, unlike French accounting, rather

designed for the use of the tax administration.
In these debates, the interests of investors, and more generally of account users,
have often been invoked by one another, and first and foremost by the normalizer
international, but their direct expression has remained underdeveloped.

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It is for this reason that for this work we focused more on the qualitative aspect regarding
the interest and presentation of this new framework. This aspect highlights the
Concerns and reservations of professionals in the sector, as well as the choices made by the IASB
(heavily criticized) and questions raised about the quality of the development process.
But beyond considerations about the content of the standards, the institutional architecture itself
same issue, whether it is about future developments of standards, their interpretation with
notably the risk of literal readings that would forget the principles that presided over their
creation or control of their implementation. As a result, the transition period could
chaotic well-being, and this situation could persist well beyond the year 2005.

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What are IAS/IFRS standards?

It is important to understand that in accounting, we have two different concepts:

on one hand the social accounts, legal, which must comply with the tax legislation of the country
does not raise a company, and on the other hand the accounts in the sense of the consolidation of a group, which

are published for the information of investors.

As much as Moroccan accounting does not change, so too for groups, since
For a long time now, there have been standards for consolidation. The most well-known are US GAAP and
The IAS/IFRS, the first of which are of American origin while the second are of European origin.
European.

The presentation of results for publicly traded companies in the USA is mandatory according to these
standards.

The IAS/IFRS are a set of European accounting standards, which have been created in the
same goal as US-GAAP. They are still under evaluation, and they tend to converge
according to American standards. The company's financial results under IAS standards can be
very different from the financial results. For the presentation of these results, we talk about standards
IFRS.

The IAS are presented in the form of a series of numbered standards (IAS1, IAS2, IAS3)
…..IAS41) which aim to standardize the accounting principles used, in order to provide to
investors clearer and more comparable information.

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Who is affected by these standards?

Listed companies in Europe and their subsidiaries in all countries will have to present their
consolidated accounts for the years covered from January 1, 2005 (with a restatement
data from 2004 to enable comparison). But it is likely that in the long term
All companies will be affected, especially since national accounting standards
from each European or non-European country that has strong economic or financial relations
with Europe will eventually converge towards the IAS reference.

What will change with the implementation of these standards:

In the context of these standards, a number of operations are accounted for differently.
(without modifying the legal and tax accounting of the country). So it is mainly the
accounting practices that will change (accounting for mergers and acquisitions operations, of
management of fixed assets, foreign exchange risks, provisions...), or by a
imputations, either through different accounting entries. The management of fixed assets is done by
Elsewhere very affected: it requires a duplication of all the depreciation rules.

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The growth and globalization of business activities have led to an increase in

acquisitions of foreign companies, as well as an increase in financial needs that has been to
the origin of the recent development of international capital markets. This dimension
the ever-growing international has highlighted the fact that accounting, an essential tool of
financial communication varies in its content and methods of application from one country to another.
the other.

At the international level, two accounting systems are opposed:

the system of Continental Europe.

the Anglo-Saxon system.

In the face of this growing internationalization of financial markets, national disparities in

the accounting methods and principles had to be reduced so that the related information
the financial statements of companies can be more easily interpreted across all markets
and by all users of the financial statements.

In 1973, organizations of accounting professionals decided to create an entity.

private with the aim of promoting international accounting harmonization. The International
The Accounting Standards Committee (IASC) has thus become the global reference for
accounting normalization and IAS (International Accounting Standards) are adopted in a
growing number of countries and companies.

Thus, from 2005 onwards, listed European groups are required to produce
of consolidated statements in accordance with IAS/IFRS standards. And by extension, all the subsidiaries of these

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European groups, including those on Moroccan soil, must report to states.

financiers according to IAS standards.

Currently, the international standard setter (IASB, International Accounting Standards Board) is
in the process of establishing a simplified framework aimed at small and medium-sized enterprises.

In Morocco, large business structures have gradually adapted to each other.

their financial management to international IFRS standards in order to win, before they are
too late, their share of the international market and from January 1, 2008, this standard will become
mandatory for the consolidated accounts of Moroccan banks. Most have already started the
site to enable the production of a balance sheet and a comparative income statement of
the exercise 2007.

So Morocco is adapting to the international language on international markets especially after

the obligation to convert to IFRS standards for consolidated banking accounts.

In this context of openness, Moroccan accounting and auditing standards can no longer
to be designed solely with regard to the needs of economic and social partners
national, but must also take into account the international dimension and the requirements of
foreign investors and financial markets in general. However, it turns out that it is a
Challenge to overcome for Moroccan companies: how to converge towards standards
International? What impacts on the financial statements? And to what extent this convergence
how is the move towards international standards perceived by the human factors of the entity?

To answer these questions, this final study project will address the transition of accounting standards.
Moroccan standards according to international norms IAS/IFRS. It is structured into three main chapters, the

first will address the context of accounting and international standardization and a presentation
The introductory section of the relevant standard (IAS16) will present the hosting company in the second chapter.

RAMSA and the third and final chapter is dedicated to the application of the IAS 16 standard which
concerns tangible assets, as well as its application within RAMSA.

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The introduction of IAS/IFRS standards has often been described as leading to a revolution.
financial information, at the very least, it represents a profound change for the
companies. The change is clear conceptually: by witnessing the choice of
the investor as the preferred recipient of financial information and especially the shift
towards fair value instead of historical cost.

In addition, the provisions of the Moroccan CGNC are mainly focused on the fiscal side, since the
Moroccan summary states are specifically produced to allow for the calculation of tax.
demandable while the IAS/IFRS emphasize the reliability and credibility of the statements
summaries whose primary recipient, as we specified, is the investor.

In this section, we will focus on presenting the origins of these standards.

international accountants. To this end, we will first present the regulatory framework
international standards IAS/IFRS, namely the IASC (International Accounting Standards)
Committee) and the IASB (International Accounting Standards Board), then moving on to a
brief presentation of the current regulations and finally present a comparison and a
reconciliation between the IAS/IFRS framework and the Moroccan framework.

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Chapter I: the context of accounting and international standardization:

Section I: Conceptual framework reference IAS/IFRS:

Before starting the presentation of the content and philosophy of accounting standards
international IAS/IFRS, we will first approach in this section the body that is responsible for
the origin of these standards, namely the IASB 'International Accounting Standards Board'. We
we will present its origin, objectives, and organization.

We will also present in this section the general principles on which the ...
the IASB framework, as well as its scope on companies at the level
European and international.

I) presentation of the IASB:

1-the origin of the IASB

The IASC is a private organization founded on June 29, 1973, by accounting professionals.
London. The founding members then were Australia, Canada, France, Germany, the
Japan, Mexico, the Netherlands, the United Kingdom, Ireland, and the United States. Subsequently, the
international professional activities of accounting organizations have been organized by
the IFAC (International Federation of Accountants) established in 1977 which maintained close ties with
the IASC.

To tighten them, an agreement was reached in 1983 by which all members of the IFAC
became members of the IASC. In January 2000, 143 member organizations and 2 affiliates
represented 104 countries.

A fundamental step was taken in 1997-1999 with the drafting of a new constitution.
which led to a profound transformation starting in 2001. The IASB then became a
independent organization in the legal form of a foundation (IASCF). It includes
henceforth the Trustees, the IASBoard, the Standards Advisory Council and the International Financial
Reporting Interpretations Committee (IFRIC).

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2- The objectives of the IASC:

The text of May 24, 2000 defines three objectives;
Develop a unique body of high-quality, comprehensible accounting standards.
respected that involves high quality, transparent financial information
comparable in order to help global financial market players and others
users to make their economic decisions.
Promote the use and rigorous application of these standards.
Work towards a convergence of national and international accounting standards towards
high-quality solutions.

This new direction comes from the rapprochement made by the IASC and the IOSCO initiated in
1993 in order to develop a complete set of standards that would serve as the basis for information
financial resources provided to the various global markets. The IASB has also turned to the
national and international standard-setting organizations (European Union, FASB for the
USA...) so that the various legal provisions recognize and admit the standards
international and that a convergence of views leads the States towards a process
harmonization of accounting rules

The IASB develops international accounting standards through a well-established process that involves the
global accounting profession, the preparers and users of financial statements, and the
national standardization bodies. The IASB is now recognized as the only process
establishment of international accounting standards.
The objectives of the IASC are to formulate and publish the accounting standards to be observed for
to present the financial statements, to promote their acceptance and application in the world and
to work generally on the improvement and harmonization of financial statements.
The members of the IASC are the professional accounting bodies that are members of the
International Federation of Accountants (IFAC)

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The IASB is funded by accounting organizations and other members belonging to it.
advice, by IFAC, from contributions of multinational companies, from financial institutions,
of accounting firms and other organizations.

b) Structure :
a. The advice
The activity of the IASC is carried out by a Council that includes representatives of organizations.
accountants from thirteen countries appointed by the IFAC Council and from up to four organizations,
having an interest in financial reports. Each member may appoint two representatives to
more and a technical advisor to participate in the Council meetings.
The Council defines the IASC program, establishes the working groups responsible for
The preparation of texts follows the progress of the work, comments on the projects submitted to it.
and meets on the adoption of standards. (It meets three times a year).
b. The advisory group
It was established by the IASC Council in 1981 and includes representatives from various
organizations involved in the preparation or use of financial statements (Stock Exchange,
National Accounting Standardization Organizations.
He meets periodically to discuss technical issues regarding the project with the Council.
the IASB, of its work program, of its strategy.
This group plays an important role in the process of developing Standards.
International Accountants and for the acceptance of established standards.
c. The Advisory Council:
It was established in 1995. This council is made up of individuals of exceptional quality.
occupant of high responsibilities in the accounting profession.
His role is to promote the general acceptance of Accounting Standards.
International and to increase the credibility of the work of the IASC through the following means between
others :

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Examination and observation of the ASC strategy and plans, in order to have
the assurance that the needs of the members are met;
Research and obtaining funding for the work of the IASC while ensuring that its
independence is not compromised;
Examination of the budget and financial statements of the IASB;

Preparation of a report on the effectiveness of the IASC Council in achieving its

objectives and in the fulfillment of the standard development process.
He ensures in particular the independence and objectivity of the Council when it makes decisions.
technical decisions on the proposals of International Accounting Standards.
The Consultative Council does not participate and does not seek to influence these decisions.

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2-The IASB:

In the structure of the IASC, the International Accounting Standards Board (IASB) has all the
technical skills which include the preparation and development of standards
accountants and an exhibition treaty.
To accomplish its mission, the International Accounting Standards Board (IASB) proceeds to:
Tests (both in developed countries and in emerging markets) for
ensure that the standards are feasible in all environments;
Public consultations to discuss and propose standards, even if
There is no demand for all the projects.
Thus, the IASB has full powers regarding the IASC's agenda, its projects, and the organization.
of their work. The board can outsource research or work to decision-makers of
national standards or with other organizations.
Among the responsibilities assigned to the IASB:
The publication of an exposition treaty for each project is normally required to publish a
draft principle or another document allowing public comments on the
main projects;
The revision of comments made within a reasonable period following their
publication
The consultation of the Standards Advisory Council on main projects, the agenda of
decisions and work priorities;
The publication of the conclusions of international accounting standards and a treaty
of the exhibition;

Le développement de la coordination avec les normalisateurs nationaux.

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3- THE FASB

Since 1973, the FASB has been the designated organization by the private sector to establish standards.
accounting and financial matters related to the preparation of financial statements and reporting.
They have been officially recognized as valid by the SEC (Securities and Exchange)
Commission).
To accomplish its mission, the FASB ensures to:
Improve the usefulness of financial reporting by focusing on the characteristics
primary ones of significant importance and reliability and on the qualities, comparability
and the uniformity of the information;
Update the standards to reflect changes in business practices and
mutations of the economic environment;
Sign up for the deficiencies observed in the financial reporting and try to address them.
improve by the process of establishing new standards;
Promote the international convergence of current accounting standards with the concern of
the improvement of reporting quality
Improve the understanding of the nature and purposes of the information contained in the
financial statements.

The FASB develops both broad accounting concepts and the standards for the
reporting. It also provides guidance for implementing these standards.
This council is composed of seven members, all permanent and all of whom must be members of
TheAICPA.
All FASB standards as well as many of its opinions are subject to a procedure.
particular "Due Process" according to which all interested parties and the public review and
comment on all these proposed accounting rules before their final adoption.
The 'Due Process': the procedure for establishing standards.
The current procedure for establishing standards is relatively complex:
1) A working party is convened. It generally includes users.
accounting documents, people using these documents, and auditors;

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The working group is asked to study the 'literature' regarding the subject, and
consider possible solutions. The group can at this stage undertake research or in
commissioner. At the end of his work, he issues a report;
3) The FASB prepares a working document based on the results of the 'Working Party';
Public hearings take place;
An 'Exposure Draft' project is published and widely distributed for critiques and comments;
The final document is submitted for a vote to become a FAS;

Moreover, a set of factors is taken into account in the selection of topics:

The extent of the question;
The existence of alternative solutions;
Technical feasibility;
The practical consequences of the question;
The possibilities of convergence with the standards of other countries;
Opportunities for cooperation with other organizations;
The available resources;
The FASB publishes FAS (Statements of Financial Accounting Standards) as well as the "
"Interpretations" that complete and comment on the "Statements".
4-The AICPA

The American Institute of Chartered Public Accounts is a professional organization.

bringing together accountants in the United States. It is therefore the equivalent of the Order of Experts.
Accountants in Morocco.
Its mission is to provide its members with the resources, information, and leadership that they
allow to provide high-quality services for the benefit of the public, employers, and
clients. She works in collaboration with the public institutions of accountants.
To achieve its objectives, the AICPA:
Represents its members and defends their interests;
Certifies and authorizes new experts according to precise qualification standards;

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Serve as the interlocutor with the public, enhancing public awareness of interests
from the profession and closely following the evolution of the needs of the CPAS.
Chartered Public Accountants
Assistance in the design and implementation of academic programs and encourages the
brilliant students to become accounting experts;
Establishes professional standards and improves the code of ethics for experts.
Note that these objectives have been revised and strengthened by strategic initiatives.
Strategic Initiatives in April 1998.
5- THE SEC

It is the securities and exchange commission and is equivalent to our council.

ethical of securities values. It was created in 1934 to restore confidence in
investors.
Any company wishing to list on one of the major American stock exchanges (notably the
NYSE and AMEX must first meet the requirements set by this commission in order to
to register with her.
This organization monitors the protection of investors' interests and the integrity of the markets.
financiers.
The SEC is led by a board of directors made up of 5 members appointed by the President.
of the United States. It also includes 4 divisions and 18 specialized offices.
She exercises her power over the methods of presenting financial statements, compliance with the rules
of publication as well as the audit rules for companies registered with it. The
The SEC is therefore responsible for enforcing these rules by the registered companies; but does not
does not establish. It is the AICPA that has taken care of it since 1934, and which, in turn, passed on the torch to

FASB in 1973.

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II-GENERAL FRAMEWORK OF IAS-IFRS STANDARDS

Principles of IAS/IFRS:
International accounting standards IAS/IFRS are based on their own philosophy. They
introduce a true change of mindset regarding Moroccan accounting tradition. The
The main principles of IAS/IFRS standards are as follows:

a. Priority importance of investors as recipients of accounting:

Among the various potential recipients of accounting, the IASB prioritizes shareholders:
As investors are the providers of venture capital for the company, the provision
financial statements that meet their needs will also meet most of the needs of
other users likely to be satisfied with financial statements." This perspective leads
notably the IAS/IFRS to strengthen the companies' obligations regarding communication
financial.

b. Primacy of economic reality over legal form ('substance over form'):

The IAS/IFRS aim to go beyond legal appearances and reflect reality.

underlying economic.

[Link] cost and fair value:

The principle of accounting for balance sheet items at historical cost, on which the
Moroccan accounting traditionally relies on, gives way in the IAS/IFRS framework to
principle of fair value. Over time, historical cost (less the
Depreciation can differ significantly from the value of use and/or sale of an asset. A
A true reflection of the economic reality would require valuing assets and liabilities at their 'fair value.
value, that is to say at their normal market value.

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2) Scope:
Every publicly traded company will have to produce and adopt the new presentation of its
accounts in accordance with a set of international rules IAS/IFRS (International
Accounting standards / International Financial Reporting standards from January 1, 2005
with an equivalent comparison in the year 2004.

Indeed, starting in 2005 with pro forma application for 2004, companies are required to
In addition to the accounting and presentation obligations specific to their country, to present their
consolidated accounts in IAS / IFRS standards. This decision follows a vote by the Commission
European, who spoke in favor of the mandatory use of the IASB framework
(International Accounting Standards Board) by listed companies.

The European regulation has allowed each of the member states:

The decision to extend or not the application of IAS/IFRS standards to unlisted groups,
part, and to all companies for their individual accounts, on the other hand;
The choice regarding the early adoption of IAS/IFRS;
an additional period of two yearserJanuary 2007) granted to European companies
stocks that only issue listed bonds or that already follow the US reference
GAAP.

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3) From IAS to IFRS:

The IAS/IFRS framework today consists of 36 published and in-force standards and 13
SIC/IFRIC (comments or interpretations of the standards issued by the Standing Interpretations)
Committee then by the International Financial Reporting Interpretations Committee). It is
also provided with a preface and a general conceptual framework that recalls the context and the
objectives, establish general applicable principles, and define certain elements of the states
financiers or concepts used in the development of certain standards.

Since 2001, the standards issued by the IASB are called 'IFRS' International Financial
Reporting Standards (international financial reporting standards), the scope of
accounting normalization thus expanding to financial information. However, the IASB has
naturally recognized the 'IAS' standards established by the IASC before 2001, and the 31 of them
those that are still in effect today retain this designation.

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Section II: the presentation of the IAS 16 standard:

In this section, we will present the standard on which we will base ourselves in the practical part.
restricting itself here to giving him an introductory framework.

I) -Objective of the standard

The objective of IAS 16 'Property, Plant and Equipment' is to prescribe their treatment
accountant. The fundamental questions concern the accounting of assets, the
determination of their carrying amount, the allocations for depreciation and impairment losses
correspondents.
This standard does not apply to biological assets related to agricultural activity.
IAS 41 'Agriculture'.
IAS 16 was published by the IASB on December 18, 2003; it is applicable to fiscal years
open from the 1sterJanuary 2005. An early application is however encouraged.

II) -PRESENTATION OF THE STANDARD :

1) Evolution of standard IAS 16:

The first version of IAS 16 dates back to 1982 and was applicable to financial years beginning on
count from 1erJanuary 1983. The text currently in force was adopted in its version of
based in 1993 with application to open exercises starting from 1erJanuary 1995, then revised
in 1998 with application to open exercises starting from 1heJanuary 1999.

La norme à été révisée suite à l’exposé sondage publié en mai 2002 dans le cadre du projet
"improvement of existing standards" and amended in February 2003.

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2) Philosophy of the norm:

The standard covers the various aspects of accounting and evaluation of

tangible fixed assets in operation over their lifespan. It requires dealing with the

Components of an asset as separate elements if they have different useful lives. It

allows for the revaluation of fixed assets as an alternative method to
the evaluation at historical cost.

According to IAS 16, a fixed asset with a limited lifespan

must be amortized over its useful life, starting from its effective date of use, deduction
based on its residual value. The amortization method must reflect the pace according to
which the future economic benefits related to the asset are consumed by the company.

3) Scope of application:

Statement of the relevant international standard:

The standard concerned by our discussion is the international standard relating to the definition,
the evaluation, accounting, and depreciation of tangible assets, namely the IAS standards
A tangible asset is a physical asset held either for use in the
production or the provision of goods or services, either to be rented to third parties or for purposes
of internal management and which the company expects to be used beyond the current financial year.
From this definition, we can retain the two uses that a real estate asset may have:

either as a building intended for internal management purposes and used in the context of
the operation of the company's activity (operating building)
either as a building intended for rental purposes (investment property).

The applicable standard in the context of the property evaluation is related to the use made of it.
the company of the latter. For the evaluation of operating properties, the applicable standard is
the IAS 16 standard. This one prescribes the accounting treatments applicable to
tangible assets. It therefore applies to properties used by a company in

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the framework of its operation. This standard proposes a method for assessing fixed assets,
their depreciation conditions, as well as the information to be provided in annexes.

IAS 16 applies to all operating tangible assets except

the following elements:

Biological assets related to agricultural activity (IAS 41);

Mining rights, prospecting and extraction of minerals, oil, natural gas and others
non-renewable similar resources;

However, the standard applies to tangible assets used to develop or

maintain the above-mentioned activities or assets, but distinct from these activities or assets.

4) -Definitions :

Depreciation: is the systematic allocation of the depreciable amount of an asset over its useful life.
useful life.
The amortizable amount: is the cost of an asset, or any other amount substituted for the cost in
the financial statements, reduced by its residual value.
The useful life: is either the period during which the company expects to use an asset,
let it be the number of production units or similar units that the company expects to obtain from
the asset.
The cost is the amount of cash or cash equivalent paid or the fair value of
any other consideration given to acquire an asset at the time of its acquisition or its
construction
The resale value or the residual value of an asset is the amount, net of exit costs.
expected, that a company expects to obtain for an asset at the end of its use.
An impairment loss is the excess of the carrying amount of an asset over its recoverable amount.

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III) - GENERAL PRINCIPLES:

1) -Recognition of fixed assets:

Tangible assets are physical assets that are held by a company either
to be used in the production or supply of goods or services, either to be rented to
third parties, either for administrative purposes and that we expect to be used on more than one
exercise.

The IAS 16 standard specifies that a tangible asset must be recognized as an asset.
when:

It is likely that the future economic benefits associated with this asset will go to
the company ;
The cost of this asset for the company can be reliably assessed.

However, security and environmental protection expenditures that may be

trained by legislative and regulatory developments - even if they do not have the
characteristics of a durable asset (do not generate economic benefits for the company)
will be immobilized as long as they are essential for the compliance of the concerned asset.

2) -Recognition criterion:

At their entry date, tangible fixed assets are recorded for the amounts
following:

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Elements Retained value

Elements acquired within the framework of a

Just value
business regrouping

Elements acquired separately Cost price

Separation between the research phase

Internally produced elements (charges) and development phase
(possibly immobilization)

Acquired immobilization at title

Acquisition cost
expensive
The fair value of the given asset, otherwise
that of the received asset, or its value
accountant if the two latter cannot
Acquired immobilization through means
to be reliably estimated
of exchange
The difference in value between the received asset and
the profit from the sale constitutes a result of the transfer
3) -The component-based approach:

When an asset includes components with different useful lives or that

gaining economic advantages at different rates, each must be recorded from
separately and amortized over its specific lifespan, with expenses associated with each.
corresponding later ones.

If the asset is globally renewed at the end of its useful life, the component approach does not
will not apply and will not affect the tracking of assets.

At the end of its life span, the component is taken out of service and written off. The new
the equipment that replaces it is itself recorded as a component of the fixed asset.

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IV) - EVALUATION OF TANGIBLE ASSETS:

1) Initial evaluation:

The initial assessment of a tangible asset for its registration on the balance sheet is the cost.
engaged to put the asset into service, with a view to the intended use.

2) Constitutive elements of cost:

The cost of an asset consists of the cash purchase price adjusted, if applicable, to its value.
current and direct costs (external and internal) allowing for the commissioning of
the immobilization as well as the amounts provisioned under the IAS standard for costs
estimates for the dismantling and restoration of sites. All costs are
possibly reduced by public subsidies allocated to investment (IAS 20 allows
to directly charge the amount of the subsidy received for the acquisition to the entry cost
the asset).

Borrowing cost:

IAS 23 stipulates that borrowing costs must be recognized as expenses in

the exercise during which they are incurred; and thus states clearly on the non
capitalization of borrowing costs.

It plans another authorized treatment for borrowing charges. Thus, those that are
directly attributable to the acquisition, construction or production of an asset and able to
give rise to the capitalization of borrowing costs can be capitalized as a
part of the cost of this asset. The amount of capitalized borrowing costs must be determined
in accordance with this standard.

The concept of borrowing costs is not limited only to financial expenses on loans.
to the extent that it also includes other costs incurred by borrowing funds such as:

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Foreign exchange differences on loans in foreign currencies

The amortization of additional costs incurred by the use of borrowing

Decommissioning costs:

Revised IAS 16 in 1998 specifies that the estimated cost of dismantling or removal of a
immobilization and restoration of sites (provided they are accounted for as
what provision according to IAS 37) is the components of the cost of an asset
body during its initial evaluation. The coverage of these costs is thus spread out over the
amortization period of the asset.

Cost of subsequent expenses:

Subsequent expenses related to an asset already recorded must be added to

the carrying amount of the asset when it is probable that future economic benefits will flow to
the company. Failing that, they must be recorded as expenses for the financial year during which
they are incurred.

The cost of an inspection or a major overhaul:

The cost of an inspection or a major revision of a tangible asset carried out at

Regular intervals must be secured if the company has isolated the asset element.
corresponding to a major inspection or revision and has already amortized this item for
reflect the consumption of benefits that will be replaced by an inspection or a revision
subsequent major. If not, the cost of inspection or major revision is recorded in
charges.

Future inspection and maintenance expenses are distinctly listed as an asset.

of the entry cost of the asset; it does not increase this entry cost but corresponds to a
ventilation of its amount (thus the main asset is amortized, based on the overall entry cost
decreased from the estimated costs of inspection and maintenance, over its lifespan.

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The component 'inspection and maintenance expenses' is amortized over the period separating two
revisions. When maintenance expenses are incurred, they increase the cost of the asset.
replacement of the originally accounted component, the latter, fully depreciated, having been removed
of the asset.

The standard provides that maintenance expenses can be integrated as a separate element.
subject to multi-year programs of major repairs or major overhauls.

Elements reducing the cost:

The products of ancillary activities from fixed assets under construction or

upon commissioning, such as sales of samples or test waste are noted:

In reduction of the acquisition cost if these products are linked to activities allowing for
the immobilization to be operational at its destination location.

In the income statement if these products are of a different nature.

V)-DIFFERENCES IN ACCOUNTING TREATMENT (IAS16):

1 - Revaluation of tangible fixed assets:

IAS/IFRS Morocco

Permits Permits

Untaxed Taxed

Practiced Rarely practiced

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International standards recommend regularly conducting re-evaluations of

in such a way that the net book value of the asset is close to its fair value
value.
In Morocco, tax rules play a penalizing role as the revaluations are
subject to tax.
Reassessments are rarely carried out in Morocco.

2- Depreciation of tangible fixed assets:

IAS/IFRS MOROCCO

The amortization period is the The depreciation period is the

expected economic lifespan expected economic lifespan
Depreciation method not specified Linear or declining mode
Fiscal duration not applied Tax duration is frequently
chosen as duration
depreciation

I n Morocco, the accounting methods for amortizing fixed assets are dependent on
tax regulations in terms of retention period and amortization schedule

The lifespan in terms of tax and accounting is generally shorter than the actual lifespan.
of fixed assets.
IAS 16 (tangible assets) specifies that the company must identify and select the
depreciation method that reflects the rate at which the economic benefits related to
the assets are consumed by the company.

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3-COMPONENT APPROACH:

.In Morocco, the component-based immobilization approach is not as systematic as

in international standards
According to IAS 16, the components of a complex asset that have varying useful lives
different from the main fixed asset, must be recorded separately and depreciated
according to their own durations.

Depreciations:
According to Moroccan regulations, depreciation is calculated for an asset whose use by
the company is determinable, this use being determined through consumption of
expected economic benefits of the asset. In other words, if an asset allows to generate during
a limited duration of economic benefits for the company (revenues, means
of exercising his activity, ..) it is amortizable over the duration of "consumption"; conversely, a
An asset that does not have this limited lifespan is not depreciable.
This is how one can distinguish between depreciable assets and non-depreciable assets such as
business assets.
International standards consider that depreciation is the systematic allocation of
amortizable amount of an asset over its useful life. This leads to considering by default that
All assets are depreciable.
The fundamental difference will lie in the depreciation of goodwill, trademarks and
other intangible assets that can represent values in the accounts of companies
significant. Thus, based on IAS standards, the presumed lifespan of goodwill
is 20 years old.

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VI) DEPRECIATIONS ET CESSIONS OU DISPOSAL

OUTSIDESERVICE
OF ASSETS:

1)-Depreciation:

General provisions:

Any asset is depreciable if its useful life is limited, provisions for

depreciations are recorded as expenses, based on the depreciable base obtained by subtracting the
residual value of the asset cost and are distributed over its useful life. The annual amount of
Depreciation allowance must reflect the rate of consumption of benefits
expected economic returns of the investment. Consequently, depreciation must reflect
the use of the combined asset of the potential effect of technical obsolescence, of the limits
legal, physical wear and other parameters that may appear.

Depreciation methods:

The method of depreciation must reflect the pace at which future economic benefits
related to the asset are consumed by the company. The three methods of depreciation mentioned by the
IAS 16 standards are:

The straight-line depreciation;

The declining balance depreciation;

Depreciation based on units of work, leading to a charge based on

the intended use or production of the asset.

The method used for an asset is applied consistently over the asset's lifespan, to
unless there is a change in the expected pace of the economic benefits of this
active.

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Review of the useful life or the depreciation method:

The useful life must be reassessed at least at each closing date. If the pace of
the consumption of future economic benefits is faster than expected, it may be
necessary to apply a new duration to the assets to be acquired and reduce the remaining duration
existing assets. It may be necessary to change the method of depreciation: moving from
linear depreciation to declining depreciation for example.

A modification of the useful life or the method of depreciation is a change

of accounting estimates whose consequences must be measured in the results of the
period during which the modification occurs.

2) Disposals or decommissioning of fixed assets:

Disposals of fixed assets:

In the case of the transfer of an asset, the fixed asset is removed from the balance sheet along with the accumulated

previous amortizations. A capital gain or loss is recognized as applicable, and is

equal to the difference between, on one hand, the net amount of the sale after deducting all expenses
of disposal, and on the other hand, the net value of the asset. The result of the disposal contributes to the result of

ordinary activities.

Disposals of fixed assets:

The items taken out of service and the elements and goods that no longer provide benefits
future economic have come out of the balance sheet. The losses incurred due to scrapping are part of the
result of ordinary activities.

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Assets awaiting disposal:

The items awaiting disposal must remain in the assets. Depreciation will continue to be allocated.
if the asset still has a net value. At each close, the asset will undergo a test of
depreciation.

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Section III: DIFFERENCES IN THE PRESENTATION OF STATES

SYNTHESIS :
So, we can summarize these divergences in two main points:

1) The changes in the balance sheet:

Equity, defined in IFRS standards, is the most affected by the news.

standards because all modifications, whether they relate to assets and liabilities or to income
and charges will ultimately be passed on to them. Indeed, while until now, equity
were relatively stable over time (except in particular situations), they should undergo
more frequent changes from now on.

Regarding provisions, some groups may see their social commitments

increased futures (defined contribution or defined benefit pension schemes, for example), due to
their accounting in the balance sheet at their market value (the accounting of obligations
of retirement was a preferred method in Moroccan standards.

Certain assets that were not accounted for in the balance sheet according to Moroccan standards will be
therefore accounted for on the balance sheet according to IFRS standards. For example, assets in credit-
lease or development costs meeting the accounting criteria set out in the
IFRS standards.

2) Changes in the income statement:

Companies that carry out a revaluation of their fixed assets should recognize, in their
accounts, a higher depreciation (with equal depreciation periods and taking into account a
zero residual value). Equity will be increased due to the revaluation, but
the results will be reduced by the increase in depreciation.

As part of these new standards, the exceptional results line will disappear. Indeed, the
most of the elements now deemed exceptional are now part of
ordinary and operational activities of the company or other products and expenses.

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Companies that grant stock options to their employees will have to account for them in
result in return for equity.

Finally, acquisition differences (also known as goodwill) will no longer be amortized.

but will be subjected to an impairment test every year. The net result will therefore increase in
proportion of depreciation eliminated, but it could periodically record sudden
impairment of goodwill following "impairment tests."

Acquisition by deferred payment:

If the supplier of an asset has agreed to payment terms extending beyond the
standard payment conditions, it is appropriate to account for the present value of the payment
future and not the nominal value of the invoice.

The assessment of the acquisition price is recorded at the present value of the cash price. The discrepancy
between the present value and the payment amount is recognized as financial expenses, reported to the
result over the duration of the granted credit.

Direct costs that can be included in the asset's cost:

All expenses that are directly related to the commissioning of an asset are incorporable to
this asset.

These are costs such as:

Trial tests, the fees of engineers and architects, the layout of positions
work, the training expenses directly related to the operation;

The costs of preparation, assembly, installation, assembly, handling, initial transport;

The costs of personnel directly involved in construction, acquisition, and implementation

Assets Management Service.

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Section IV: rapprochement between the Moroccan reference and the

IAS/IFRS framework: (IAS 16)

After approaching Standard IAS 16 and its provisions, it will be necessary to analyze the points of
convergence and divergences between this framework and the Moroccan corpus. We will divide these
divergences in three categories; general divergences, divergences of principles and treatment
accountant.

I)- GENERAL DIFFERENCES:

There are several discrepancies between IAS/IFRS accounting standards and accounting standards.
Moroccan introduced by the Moroccan General Accounting Plan (PCGM). These divergences are
the following:

The PCGM governed the accounting law of companies and merchants, while the IFRS standards
acquire the field of financial information in general. The IFRS aim to be of a
larger application.

The PCGM primarily defines accounting with an accounting plan and account numbers.
accounting, accounting rules, and he gradually expanded his powers to the states of
restitution of information. In contrast, the IFRS addresses financial information through the
communication that is made to shareholders, markets, and third parties to then
define standardized rules of content and assessment. Their orientation is predominantly
tour to investors.

The PCGM originates from the Moroccan public authorities while the IFRS are determined by...
private organizations independent of public and political authorities.

IFRS standards consist of only one framework that must be applied in its entirety.
Moroccan standards include two frameworks, one for thesocial accounts
and one for theconsolidated accountsWhile the IFRS standards will make no distinction between
method between social and consolidated accounts, the application of the two frameworks in Morocco
leads to surprising gaps and difficult-to-understand divergences.

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Moroccan accounting law also makes significant contributions to accounting methods.

holdings regarding the format of accounting documents and papers to determine what it will be
retranscription in the accounts. The IFRS, of Anglo-Saxon influence, primarily retain
the basis of operations for their integration into the financial statements. Thus, there is a
primacy of substance over form in IFRS, it is the 'substance over form'.

The tax rules, and in particular the rules for determining the bases of income tax on
benefits, still govern many accounting rules and the methods used in the
Moroccan companies because the PCGM allows certain exceptions or that the tax rules
impose certain accounting entries under penalty of being deprived of deduction rights
charges. The IFRS approach completely contrasts with tax rules because these are
treated separately. The calculation of the profit tax is done outside the financial statements and the
accounting.
II) PRINCIPAL DIVERGENCES:
International accounting standards IAS/IFRS introduce a real change in mindset by
regarding Moroccan accounting. The main paradigmatic divergences with the plan
Moroccan General Accountant PCGM are the following:

Importance given to investors:

In Morocco, the State has assigned itself an essential role in the accounting sphere by enacting law.
accountant. This is how accounting largely takes into account the objective of having a
accounting substrate allowing to establish tax regulation. Moreover, mediator of interests
potentially divergent, the State has endeavored to reconcile the expectations of the different users
from accounting (managers, creditors and suppliers, employees, shareholders…). The IASB is a
private organization, independent of public authorities, but whose main interlocutors are,
besides the professional organizations and the major audit firms, the main regulators
stock exchanges (the US SEC, the UK FSA, the French AMF...). Thus, the IASB does not
It's no secret that shareholders are the most privileged. This perspective particularly leads the
IAS/IFRS to integrate certain off-balance sheet items (derivatives) into the balance sheet.
example) and to strengthen the obligations of companies regarding financial communication.

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The following three divergences can also be seen as the implementation of this
special consideration given to investor information.

2) Economic reality and Legal form:

While Moroccan accounting law generally relies on the form of a transaction to
in determining the integration in the accounts, IAS/IFRS goes beyond legal appearances
to transcribe the economic reality of operations. This is how certain titled assets or
housed in ad hoc vehicles legally separate from the company must, as applicable, be
reintegrated into the balance sheet, or that the assets subject to a lease (therefore not owned
legally not to the company) must be recalibrated as if they had been financed by
loan.

3) Historical cost and Fair value:

One of the main accounting principles based on historical costs is only very partially
applied by the IFRS. This is largely a consequence of 'substance over form'.
This will involve for the accounts, the establishment of calculation and monitoring methods for these Justs.
values: it will have to integrate the possibility of greater volatility in the value of certain
active. However, both due to practical difficulties and because this project has sparked strong
critics, this principle is not applied to all assets and liabilities of companies It is
nevertheless, for example, by recording, in exchange for the income statement, the profits
or less latent values related to equity securities or to receivables or debts denominated in
devices. It also involves conducting impairment tests to reassess
regularly assess the value of tangible assets.

4) Primacy of the balance sheet over the income statement:

The IAS/IFRS framework is primarily based on a definition of assets and liabilities.

Thus, a product is designed as an increase in assets (or a decrease in liabilities), a
charged as a reduction of asset (or an increase of liability), and the result is measured
as the evolution of equity observed between the closing and the opening (excluding operations
with the shareholders).

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International accounting standards IAS/IFRS are based on their own philosophy. They
introduce a real change of mindset compared to Moroccan accounting tradition. It
allows for providing more economic information about the company, more reliable, relevant and
intelligible. The IFRS framework came to strengthen trust and consequently defend
the funding agencies including investors.
A certain number of criticisms are directed at him, particularly the evaluation based on
modelings, in which a degree of arbitrariness and uncertainty can be introduced, so too the
Market data are subject to high volatility. Not to mention the enormous cost of
convergence towards these standards.

Regarding Moroccan standardization, the government has already made efforts in terms of
development of financial and accounting information, but there is still much to be done in this area
level.

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Chapter II: Understanding the RAMSA:

The choice of RAMSA (Autonomous Multi-Service Management of Agadir) was motivated by:
The reputation of RAMSA;
In its grand structure;
Its qualified staff and managers who have demonstrated a capacity for collaboration
and supervision.
For this chapter, we will try to present RAMSA as a host company, its
activities and its structure, as well as its different services.

Indeed, it is simply a description of the host company, its history, of

its identity sheet, its characteristics and its organizational structure with a view to
to clarify to readers the circumstances of the development of the final study project.

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Section 1: the acknowledgment of RAMSA:

1-Historical overview:

Given the vital role that water and electricity play, treatment and distribution
these goods could only be entrusted to competent organizations in this field. It is
as we witnessed the succession of three main operators:
Before 1964:
The water and electricity distribution sector was operated by the Moroccan Company of
Distribution (SMD) and the Moroccan Energy Company (SEM).
In 1964:
The State decides to take charge of the distribution of drinking water and electricity. And this by
creation of communal management bodies endowed with civil responsibility and financial autonomy
(decree n°2-64-394). This decision was crucial in order to adjust the price levels to
purchasing power of Moroccan consumers.

In 1982:
And more specifically, on September 16. The autonomous multi-service management of Agadir was created, with
as the main activity, the distribution of drinking water, which was previously ensured by
The National Office of Drinking Water 'ONEP'.
At first, the management was only responsible for the distribution of potable water. It was not assigned
the management of liquid sanitation than in 1992

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2- Data sheet:

Sole Proprietorship: Autonomous Multi-Services

of Agadir (RAMSA)

Creation date: 16/09/1982

Legal form: Public institution of a character

commercial and industrial equipped with the
civil personality and autonomy
financial

Mission : Ensure the distribution of drinking water and

manage liquid sanitation within
of the Great Agadir.

Nombre de clients:115 000 (fin 2004)

Revenue: 217 million dirhams (end of 2004)

Water: 171 million dirhams
Sanitation: 46 million dirhams

Number of staff: 422 including 46 executives (end of 2004)

Head office: 18 November Street, BP 754 QI Agadir

Phone: 028 22 30 30

Fax: 028 22 01 15

Website: [Link]

E-mail : regie_ramsa@[Link]

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3-General characteristics of RAMSA

RAMSA is a public organization with legal personality and financial autonomy.

placed under the joint supervision of the Ministry of the Interior and the Ministry of Finance.

Mission and tasks of the RAMSA:

The mission assigned to RAMSA according to the specifications that govern it is

to ensure the management of drinking water distribution networks and liquid sanitation in
its area of action (Greater Agadir).

This is how the management oversees:

The supply of citizens and organizations within its area of action of drinking water
purchased from the ONEP (National Office of Drinking Water) under good conditions of
quality and throughput;
The collection, transport, disposal and possibly treatment of stormwater.
household or worn out;

The construction, operation, and maintenance of facilities (reservoirs, pumping stations,

pipelines, lift and treatment stations) to ensure the achievement of its
mission.

Action zones:

The area of action of RAMSA is Greater Agadir. It consists of:

Prefecture Agadir-Idaoutanane: grouping 4 urban communes (Agadir, Anza, Tikiouine and

Bensergao) and a rural commune of Aourir.

Prefecture Inezgane-Ait Melloul: comprising 3 urban municipalities (Inezgane, Dcheira, Aït)

Melloul) and a rural municipality of Azrou.

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The suppliers:

As mentioned above: RAMSA is responsible for the distribution of water and of

management of the sewage network. To accomplish these tasks, it calls upon several
suppliers, the main ones are:

ONEP :

The national drinking water office ensures a water treatment function that is found in the
dams and the transfer to various supply lines. The latter allow to supply all
the areas of Agadir as well as:

The Ahmar Boudhar conveyances: Which is the most important of the conveyances, it is supplied with
starting from the Ahmar Boudhar field and the Dkhila dam. The water is treated at the Sidi station.
Boushab is 30 km east of Agadir.

East Adduction: Which brings water from the wells of the East field and transports it to the station
Boutasra, elevation 30 at Bensergao.

South Adduction: From the wells of the southern field and the Admine drilling, it leads to the station.
Boutasra through a f 700 pipeline. It also supplies the Inezgane airport.
The Ahmar Boudhar adduction, all others including the one from the golf course converge towards the station.

transitory Bouargane side 90 through two pipes f 600, f 400.

The companies specializing in technical studies

As part of the sanitation operations, RAMSA is launching calls for tenders for the
major projects. It mainly involves five distinct companies: SOMELECAD, TABATE,
TICHKA, PEACE, LPEE (public laboratory for testing and studies).

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ELYO

This is a French company that ensures the purification and treatment of wastewater.
Bensergao station. In this field, RAMSA is the first in Morocco to attempt such a
experience.

It is worth noting that this wastewater is distributed to farmers for the irrigation of fields.
agricultural.

The RAMSA deals with other suppliers of ordinary supplies necessary for the operation.
namely: Itissalat Al Maghreb, ONE …etc.

In addition, it has two wells, one in Tikiouine and the other in Inezgane, which it uses for.
distribution of water after its treatment. But production remains low compared to the
real needs of the population of Agadir.

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4-The organizational structure of the Management:

Organization chart of the RAMSA:

Management bodies:

The R.A.M.S.A. is managed by three bodies: The board of directors, the management committee and
the general director.

The board of directors:

It is chaired by the WALI of Agadir who is assisted by 8 members elected from within by the councils.
communal, and 4 members designated by the Ministry of the Interior.

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This council deliberates on all strategic questions and important decisions and makes all
the useful provisions for this purpose.

The management committee:

It is made up of a board member, appointed by the Ministry of the Interior and

two members appointed within it by the board of directors.

This committee monitors the implementation of decisions and settles all matters for which it has received
delegation of the board of directors.

Administrative and financial supervision:

Administrative guardianship:

This is ensured by the Ministry of Interior. It aims for the compliance of the Administration with the policy.
sector stopped by the public authorities.

Tutelle financière et comptable

It is exercised by the Ministry of Finance. It concerns the execution of expenditures and

recipes in compliance with legal and regulatory provisions.

In addition to supervision, the R.A.M.S.A is subject to two types of control:

Internal control ensured by internal audit visit.

External control ensured by external audit visit.

In addition to these two, the R.A.M.S.A. is subject to the same conditions as companies and

public institutions under the control of the General Inspectorate of Finances and the Court of
Accounts.

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The management structure:

The RAMSA has just adopted a new organizational chart to differentiate the authorities and the
responsibilities within the company on one hand, and on the other hand to integrate the attributions of
different stakeholders around a global strategy. They describe the relationships of
command among all the units that make up the Management.

The statutory staff of the Authority is divided into three categories:

The administrative and financial staff.

The technical staff.

The sales staff.

Temporary staff is recruited to meet specific market needs.

. Commercial Division

The main function of this service is administrative in nature; indeed, it is responsible for management of the
relations maintained between the subscriber and the management, The operation begins with the submission of the file

of subscription or connection and ends with termination either by the subscriber's free will or
by the will of the Board.

. Division technique

It is composed of 2 services: project and works service, and procurement service.

Studies and Works Service:

a- Study office:

This office is tasked with studying all the projects necessary for the improvement of nutrition.
In water, it is the basis of the R.A.M.S.A. since it deals with the work concerning the networks.

b- Works office :

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This office is tasked with:

Carry out the work that is within the reach of R.A.M.S.A., it concerns simple extensions or
reinforcement. Taking care of monitoring the work on site, such as the installation of pipes
in the new developments, extensions, and the networking of the network.

Supply service:

It is composed of:

Offices (Markets, Tenders, Purchase Orders, and Invoicing).

Store (Central store, sub-store).

Fleet Management (Vehicles, Mechanics, Fuels)

Accounting and Financial Division

Organization:

The organization of this division is as follows:

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Head of the division

Secretariat

Accounting Accounting Treasury Accounting

Matter General General Analytical

Accounting
Clients

Accounting
Supplier

Material Accounting :

The materials accounting service is an interface between the procurement division and
general means (stock management service) and the accounting and financial division.

His mission is to monitor stock movements in quantity and value. These assignments are:

Issuance of delivery notes for supplies and spare parts;

Verification of the nomenclature and its compliance with the allocation guides;

Entry of stock movements based on the data transmitted by the management service
stock and their monitoring to correct detected anomalies;

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Verification of the coordination between the accounting stock (theoretical) and the store stock (actual);

Follow-up on inter-regional movements (loaned equipment)

Monthly statement preparation (perpetual inventory, status of stock movements in quantity and in
value, status of inter-regional movements,...) and their transmission to the relevant services:

Monitoring of obsolete equipment.

General Accounting:

This service aims to record transactions (purchase, sale, borrowing, lending,

acquisition of fixed assets,...) in order to prepare the financial statements (Balance Sheet, CPC,...)

situations serving as a basis for analyses.

As a result, it is divided into two sections:

Accounts payable and Accounts receivable;

Accounts Payable:

She takes care of the accounting of expenses after their verification as well as the tracking of
various expenses of the management, namely: purchases of supplies or services, the costs of
staff, taxes and duties, or periodic charges (rent, telephone, electricity, ...).

She is therefore closely related to the procurement department (in the case of a purchase by
consultation and purchase order or as part of a supply contract) and the offices of
markets for technical divisions (case of technical work markets).

b- Client Accounting :

This section deals with the recording of transactions related to the sale of the product 'water'.
drinking water" and the "sanitation" service.

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The revenue from the management came from:

-work with participation (connection to the drinking water and sanitation networks);

subscription contracts;

drinking water consumption (bills);

fees for water cut-offs and meter removals;

fees for account cancellations;

other work carried out by RAMSA.

She is therefore closely related to the sales division. Indeed, the latter
transmit periodic situations (generally monthly) for accounting management
of the product and collections.

c- The seizure :

She is responsible for recording transactions in an accounting system called Fcompte.

And this is based on the accounting entries received from accounts payable (in the case of purchases),
of accounts receivable (in the case of sales), of general cash flow (manual journals of
different treasury accounts) as well as from the personnel service office (in the case of payroll).
newspapers are coded as follows:

Accounting journals:

Purchases: 60

The product: 70

Various operations (OD): 95

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The pay: 90

Financial newspapers:

The bank: from 10 to 24

The cash register: 2

The main cash register: 1

During entry, the operations are specified by water or sanitation establishment. The
the system takes care of consolidating operations into unified accounts.

These journals are recorded in the general ledger and then the trial balance is prepared to reach the end of

the exercise of balance sheet summary accounts, CPC.

d- Tax declaration:

This department is responsible for tax declarations and receipt stamp duties, namely:

Value Added Tax (VAT)

The income tax (IGR)

Corporate tax (IS) and other taxes; Fiscal stamps.

VAT declarations are made monthly and according to the cash accounting scheme.

TVAdue= TVAfacturée - TVA déductible TV Deductible

(Month M) (Month M) on real estate (Month) on expenses (Month M-1)

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This department receives monthly reports specifying the receipts and expenditures.
monthly reports of accounts payable and receivable as well as cash management.

IGR declarations are made monthly based on a statement received from the personnel service.
(payroll office) and specifying the base salary, bonuses and allowances as well as the amount of
the IGR.

The corporate tax is 35% of the taxable income calculated from the accounting result.

The license, the property tax, and the urban tax are calculated by the tax administration and are
verified by this section.

The declaration of tax stamps: all cash receipts (in cash) must include
stamp duty fees (subscription, water consumption, connection and other works)
according to a precise scale that varies depending on the amount collected. These fees must be
declared and paid to the public treasury on a monthly basis.

General treasury:

This section deals with cash management of the agency through cash management.
and mainly, bank assets (BP, BMCE, and BMCI) and in the public treasury.

Her main tasks are: Monitoring bank payments. Indeed, each collector and
The cashier of the department hands over the collected amounts (checks and cash) of the day to the cashier.
principal who deposits them in the bank and sends the deposit receipts to the treasury section for
monitoring and support.

The preparation of payments; here is the diagram representing the invoice circuit

The maintenance of the cash journal. Indeed, all operations (deposits and payments) are
manually recorded in journals. An off-balance sheet situation is kept for each
bank account. For another service of the RAMSA

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Invoice Background File

1- Consultation case
or supply market

Order Office Secretariat of the Divisions

DFC Technique
Reception and
recording Reception and Verification +
recording background attached
of the file
2- case of Market of
work
Division
Procurement
t
Attached verification
from the case file

Treasury Accounting
General Suppliers
Establishment of Verification and custody
the prescription of a copy for taking
payment and accounting manager
preparation of
regulation (check
or transfer)

Direction Agency Treasury

General Accountant General
Signature of the OP Signature of the OP Payment submission
and the regulation and the regulation signed at
Supplier

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Cost accounting:

This service is responsible for determining the cost price by cost center called number of
work. Indeed, all work numbers are assigned the corresponding charges.

These charges are of four types:

Main d'œuvre

Store exit;

Transport

Entrepreneur and various;

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a- Labor: this class includes the payroll charges allocated according to the number
hours worked. They are determined based on a monthly report received from the service
payroll personnel

b- Warehouse exit: refers to supplies and materials that have been taken out of the management's warehouses with justification.

by release vouchers containing the appropriate work number. This service receives from the service
material accounting a statement of exits by work number.

c- Transport: this class includes the costs related to the use of transport vehicles
(fuel, maintenance and repairs, etc.) allocated according to the number of kilometers traveled. In
In fact, each vehicle user records daily, in a logbook, the number
of kilometers traveled (difference between the arrival and departure indexes) and the job numbers
correspondents.

The service receives a monthly report summarizing the information contained in these notebooks;
and annually a statement of the expenses incurred by each vehicle. The valuation of
Mileage is calculated at the end of each period by dividing the total amount of expenses.

(Fuel, maintenance and repair, insurance and stickers, depreciation) divided by the total number of
kilometers traveled.

d- Entrepreneurs and various: that is to say all the services provided by

external companies. These charges are transmitted by the general accounting (journals
accountants: purchases, cash fund expenses, ..).

It should be noted that the work number corresponds either to an investment charge referred to as
first establishment or an operating charge. A allocation guide is established every
year in collaboration with the technical services specifying the nature (first establishment or
exploitation) and the locality (9 localities: Agadir, Bensergao, Inezgane, Dcheira, Ait Melloul,
Tikiouine, Anza, Azrou and Aourir.

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This chapter allowed us to take a close look at the structure of RAMSA, its activities, and its history.
Based on our initial observations during the time we spent together with
RAMSA personnel, we noticed that a significant number of employees have not
never heard of the IAS/IFRS framework, this is due to the ambiguities they have about it,
and the complexity of this international accounting framework.

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After discussing Moroccan and international accounting regulations, as well as the

Presentation of IAS 16 standard concerning tangible assets on which we will
work in this area in a well-detailed way with real application cases inspired
data and information from the RAMSA heritage.

It is time to raise the issue of work on which we based our analysis of the
movements of tangible assets of RAMSA through certain aspects namely
the component approach and the concept of fair value its advantages and disadvantages.

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Chapter 3: The application of the IAS 16 standard within RAMSA:

Section I: Accounting fixed assets between the CGNC and

IAS 16

In Moroccan accounting, the general code of accounting standards aims to

the main objective is to provide relevant economic and financial information in terms of quality and
reliable in terms of quantity. This information, whatever account it represents, must
satisfy a certain number of fundamental accounting principles, which total seven.
At RAMSA, the information is derived according to these said standards and remains true to their constraints and

application.

In the case of tangible assets; a very important element of heritage

the company; they have a rather special treatment in Moroccan accounting. These accounts
The rules for immobilization have accounting regulations from acquisition to disposal, of course.
by the depreciation and the revaluation of their historical entry value. the methods
evaluation of assets and liabilities states that fixed assets of the assets
time-limited entry value is subject to value adjustment through
annual depreciation. This input value is not always synonymous with the price
of acquisition; it does indeed take their acquisition price; the related fees and the honors and
acquisition costs.
Depreciation consists of spreading the depreciable amount of the asset over the duration.
forecasted usage by RAMSA according to an amortization plan. However, a
A fairly important component of the treatment of these fixed assets serves as a basis for determining
the depreciation rate of this asset is the net depreciation value NDV; which is calculated at
subtract the input value reduced by the total amount of depreciation. This net book value serves as
comparison base at the inventory date or the current value is compared to the entry value
for non-depreciable items or the net book value after depreciation of
the exercise for depreciable assets.

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This diagram will clearly explain the divergences that exist between the two standards:

IFRS Standards Moroccan Standards

Approach by distinct components: Approach by distinct components:

Mandatory Not provided for by the CGNC
Complex immobilization assembly
–Touch the constructions of SOTHERMA
Depreciation by family

The entry fee: The entry fee:

Equal to the cost price or acquisition cost
of immobilization Accounting at cost price
Reassessments: Reevaluations:
By category of fixed assets made Set of fixed assets
regularly Regularity not required
Asset depreciation
Depreciation: Depreciations:
Based on the useful life of Based on the lifespan
each component The buildings are depreciated over 20 years.
Regular review and revision of methods Possibility to revise the amortization schedule
and depreciation periods according to an expert with ETIC justification
real estate Residual value:
Residual value: when the usage duration is < lifespan
recognized according to IAS 16

More important information to provide:

Respect for accounting principles

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Section II: the approach to the treatment of the IAS16 standard:

After giving a presentation and a clear theoretical vision of the standard to be addressed
In our report, it is time to add a practical vision to effectively provide a
brightening image to this standard of tangible assets. In this part we will
start directly with the recognition of fixed assets which represents a cost
Significant, for the RAMSA we have noted that the technical installations and equipment tools
represents an important value that we will explain well through an approach by
component that we are going to practice on these assets which are traditionally handled by the
RAMSA.

A. Component-based approach

When an asset includes components with different useful lives or that

seeking economic advantages at different paces, each must be
registered separately and amortized over its specific lifespan. If the asset is renewed
Overall, at the end of its useful life, the component-based approach will not apply and
will not affect the monitoring of fixed assets.
At the end of its lifespan, it is taken out of service and written off. The new equipment
who replaces him is him same recorded like a component of
the immobilization.
The breakdown of tangible fixed assets allows companies to better take into account
account for the complexity of certain depreciable assets, some of which have uses
different.

Ref: http:/[Link]/directions services/CNCompta/.

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The terms of application will certainly lead to difficulties both fiscally and
accountant and it will be well explained by these inspiring practical cases from the heritage of the
RAMSA :

Concrete example of RAMSAR:

To illustrate this approach, we chose the example of a pumping station whose duration of
life is 20 years old, and we tried to break it down into several components each component
with a different lifespan.

The elements Value Mode Lifespan

elements of depreciation
Civil engineering 272323.8 20 years linear
Electrical equipment 200000 8 years linear
Pumps >= 30 l/s 100000 8 years linear
Pump <30l/s 50000 8 years linear
Anti ram 89220 10 years linear
Hydraulic equipment 100000 10 years linear
Transformer Mt/Bt 100000 10 years linear
TOTAL 911543.8

NB: this station has already been reassessed.

The pumping station has a lifespan of 20 years, the other components that are part of it
the exception of electrical equipment, pump >= 30 liters/s, Pump < 30 l/s, and the equipment
electric ones that have a lifespan of 8 years and for the others, which have a lifespan of 10 years.
This means according to IFRS standards to separate them from the main asset and
therefore create corresponding depreciations.

Knowing that the commissioning date of this equipment is 06/01/2000 and the mode
The depreciation used by RAMSA for all of this equipment is the straight-line method.
the amortization schedule for each of these fixed assets is as follows:

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Electrical equipment
rate cumulative
years base depreciation allowance of depreciation VNA
2000 200000 12.50% 12500 10000 190000
2001 200000 12.50% 25000 35000 165000
2002 200000 12.50% 25000 60000 140000
2003 200,000 12.50% 25000 85000 115000
2004 200000 12.50% 25000 110000 90000
2005 200000 12.50% 25000 135000 65000
2006 200000 12.50% 25000 160000 40000
2007 200000 12.50% 25000 185000 15000

Pumps >=30l/s
rate cumulative
years base amortization allocation depreciation VNA
2000 100000 12.50% 6250 5000 95000
2001 100000 12.50% 12500 17500 82500
2002 100000 12.50% 12500 30000 70000
2003 100000 12.50% 12500 42500 57500
2004 100000 12.50% 12500 55000 45000
2005 100000 12.50% 12500 67500 32500
2006 100000 12.50% 12500 80000 20000
2007 100000 12.50% 12500 92500 7500

Pump<30l/s

rate cumulative
years base depreciation allocation depreciation VNA
2000 50000 12.50% 3125 3125 46875
2001 50000 12.50% 6250 9375 40625
2002 50000 12.50% 6250 15625 34375
2003 50000 12.50% 6250 21875 28125
2004 50000 12.50% 6250 28125 21875
2005 50000 12.50% 6250 34375 15625
2006 50000 12.50% 6250 40625 9375
2007 50000 12.50% 6250 46875 3125

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Anti-rams
rate cumulus
years base depreciation allocation depreciation VNA
2000 89220 10% 4461 4461 84759
2001 89220 10% 8922 13383 75837
2002 89220 10% 8922 22305 66915
2003 89220 10% 8922 31227 57993
2004 89220 10% 8922 40149 49071
2005 89220 10% 8922 49071 40149
2006 89220 10% 8922 57993 31227
2007 89220 10% 8922 66915 22305

Hydraulic equipment

rate cumulative
years base depreciation allocation of depreciation VNA
2000 100000 10% 5000 5000 95000
2001 100000 10% 10000 15000 85000
2002 100000 10% 10000 25000 75000
2003 100000 10% 10000 35000 65000
2004 100000 10% 10000 45000 55000
2005 100000 10% 10000 55000 45000
2006 100000 10% 10000 65000 35000
2007 100000 10% 10000 75000 25000

MV/LV transformer

rate cumulative
years base depreciation allocation depreciation VNA
2000 100000 10% 5000 5000 95000
2001 100000 10% 10000 15000 85000
2002 100000 10% 10000 25000 75000
2003 100000 10% 10000 35000 65000
2004 100000 10% 10000 45000 55000
2005 100000 10% 10000 55000 45000
2006 100000 10% 10000 65000 35000
2007 100000 10% 10000 75000 25000

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Accounting adjustments in IAS/IFRS:

pumping station amortis / pumping station

911543. 8 (historical value) 341828. 93(2) cumulative of (7.5 years)

The accounting restatement under IAS/IFRS standards:

Pump station: depreciation of station

911543. 8 200000 75000 341828.93 (1)

100000
50000 72500
89220 36250 (3)
100000 33457,5
100000 37500
37500

Overdrawn balance: 272323.8 credit balance: 117121.43

Electrical equipment:

Electrical equipment amortization/electrical equipment D.E.A team is high

200000 185000(a) 110000(a)

Accumulated depreciation according to IFRS =185000 (see amortization schedule)

Depreciation calculated using the traditional method: 200000 * 7.5/20 = 75000

Additional allocations: 185000 - 75000 = 110000

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Pump > =30 L/s :

Pump >=30L/s amortis/Pump >= 30L/s D.E.A Pompe >= 30L/s

100000 92500(b) 55000(b)

(b) cumul d’amortissement selon IFRS = 92500

Depreciation calculated by the traditional method: 100000 * 7.5/20 = 37500
Additional allocations: 92500 - 37500 = 55000

Pumps <30L/s :

Pump <30L/s amortis/Pump<30L/s D.E.A Pump<30L/s

50000 46875(c) 28125( c)

(c) accumulated depreciation according to IFRS = 46875

Depreciation calculated using the traditional method: 50000 * 7.5/20 = 18750

Additional allocations: 46875 - 18750 = 28125

Anti ram

Anti-Aries amortis/Anti ram D.E.A. Anti Aries

89220 66915(d) 33457.67(d)

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(d)cumul d’amortissement selon IFRS = 66915

Depreciation calculated by the traditional method: 89220 * 7.5/20 = 33457.33
Additional allocations: 66915 - 33457.33 = 33457.67

Hydraulic equipment

Hydraulic equipment shock absorbers/hydraulic equipment D.E.A Hydraulics Equipment

100000 75000(e) 37500(e)

(c)umulative depreciation according to IFRS = 75000

Depreciation calculated using the traditional method: 100000 * 7.5 / 20 = 37500 Allocations
supplementary: 75000 - 37500 = 37500

MT/BT transformer:

Transformer amortis/Transformer D.E.A transforms

100000 75,000 (f) 37500(f)

(f) accumulated depreciation according to IFRS = 75000

Depreciation calculated by the traditional method: 100000 * 7.5 / 20 = 37500 Allocations

complementary: 75000 - 37500 = 37500

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Justifications of the calculations:

the input values of fixed assets

(2) The depreciations calculated by RAMSA regarding the pumping station are:
911543. 8 * 7.5/20 = 341828,93
(3) Additional allocations = Accumulated depreciation according to IFRS - Calculated depreciation
by the initial method

Amortization allocation Economy

Designation Amortization according to IFRS supplementary tax
Electrical equipment 75000 150000 75000 26250
Pumps >=30l/s 37500 110000 72500 25375
Pumps <30l/s 18750 55000 36250 12687.5
Anti ram 33457.5 66915 33457,5 11710.125
Equipment
hydraulic 37500 75000 37500 13125
Transformer mt/lt 37500 75000 37500 13125
Total 239707,5 531915 292207.5 102272.625

Summary of the example:

So based on the presentation of the operations and adjustments above, it appears

clearly the impact of this component-based approach in the RAMSA report as well as in
the income statement.

1- In the balance sheet:

There would be a distinction between components that have a short lifespan, particularly the
electrical equipment, pump >= 30 liters/s, pump < 30 liters/s.
Also an acceleration of the depreciation rate of all components that is
explained by the increase in depreciation (which has risen from239707, 5 à 531915according to the
IFRS).

2- in the income statement:

Increase in allocations and consequently tax savings of a total of102272.625DH.

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B - Evaluation of tangible assets:

.
We will focus in particular on the provisions of this standard regarding the possibility of
conduct re-evaluations.

1-Condition for revaluation:

The IAS 16 standard makes historical cost valuation its reference treatment.
Revaluation of tangible assets is, however, allowed under certain conditions:
The land and buildings must be revalued at their fair values by experts.
qualified.
For highly specialized assets that are not subject to regular transactions, it is necessary to
retain the cost of replacement at identical as a substitute for the net book value.
The evaluation is based on the current use of the property. However, if a change
what is expected are the new terms of use that need to be taken into account.
The revaluation must apply to all assets of the same category (same nature,
same use)
All goods of the same category must be revalued simultaneously in order to avoid a
too much heterogeneity in the evaluation of the same item. The successive re-evaluation is
however allowed provided that it is carried out quickly.
Reevaluations must be conducted with sufficient regularity to avoid any discrepancies.
significant between the net book value of the assets and the new value resulting from the
revaluation. The IASB believes that for fixed assets not subject to fluctuations
important assets, a frequency of 3 to 5 years may be sufficient.

Ref: [Link]

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2-The revaluation model:

After being recognized as an asset, a tangible fixed asset whose fair value can
to be assessed reliably must be accounted for at its revalued amount, namely its fair value
value at the date of revaluation, decreased by the cumulative subsequent depreciation and the cumulative
of subsequent value losses.
The fair value is the amount for which an asset could be exchanged between willing parties.
informed, consenting and acting under normal competitive conditions.
Revaluations must be carried out with sufficient regularity for the value
accounting does not differ significantly from what would have been determined using the
fair value at the closing date.
The frequency of reassessment depends on the fluctuations in the fair value of the assets in
reassessment course. When the fair value of a revalued asset significantly differs
From its book value, a new revaluation is necessary.
When a tangible asset is revalued, the entire category of assets
tangible assets of which this asset is part must be revalued.
When the carrying amount of an asset is increased following a revaluation,
the increase must be credited directly to equity under the heading "differences of
"reassessment." However, a positive reassessment must be recognized in the results in the
measure where it offsets a negative revaluation of the same asset, previously recorded
as a result.
When, following a reevaluation, the carrying amount of an asset decreases, this decrease
must be accounted for in the result. However, a negative revaluation must be directly
charged to equity under the heading 'revaluation surplus' to the extent
The accounting of the 1st revaluation:
The accounting for the revaluation can be carried out in two ways, either by adjusting the
gross value and accumulated depreciation of the asset. Thus, adjustment of the net value of the asset
after eliminating the accumulation of previously recognized amortizations. The chosen method is

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neutral on the future amount of depreciation allowances. In any case, the difference in
Revaluation will be charged to equity.

3-the observation of the re-evaluation:

We opted for the evaluation of tangible assets using the cost method.
historical means at the entry cost reduced by the total of depreciation and losses of
values

The accounting treatment of this revaluation is presented by 2 methods as follows:

The increase is credited in

equity (difference of
reassessment

Increase in the accounting value of If it offsets a revaluation

the act
negative, it is recorded in
produced at the limit of the amount of
this loss. The surplus is
accounted for in equity

The decrease is attributed to

equity on the gap of
Diminution of value reassessment at the limit of its value
activity table The surplus is accounted for in
charges.

Example:

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Recording of variations
Péridine Variation Just
value Capital Products Charges
prepare
N 100
N+1 120 20 20
N+2 90 -30 -20 -10
N+3 80 -10 -10

N+4 105 25 5 20

4-accounting :
The revaluation surplus, if positive, must be recorded directly in equity under a
separate heading "revaluation difference", so that the operation does not show any
profit. If the re-evaluation results in a decrease in the value of the asset, the revaluation surplus
is recorded as responsible for the current financial year.

5-Information to provide:

For revalued assets, the following must be indicated:

The basis for revaluation used;
The re-evaluation date;
The use or non-use of an independent expert;
The possible indices used for determining replacement costs;
The net book value of each category of fixed assets if they had not been
reassessed;
The revaluation surplus, its variation during the fiscal year as well as the restrictions on
distribution to which it is subjected.

Revaluation value – net book value at historical cost at the date of revaluation.

C- The concept of fair value:

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The fair value has been defined by the IASC (IAS32, 1995): 'The amount for which an asset can
to be exchanged or a passive issued between two willing and well-informed parties within the framework
of a transaction with conflicting interests.
It is a broader concept than market value; in the absence of a available price, the assessment is
made by the exchange value or market price of an asset with similar characteristics, or by
the calculation of the present value at market rate of cash flows.
It is actually about replacing an accounting value, established based on historical data, with a
market value at a given date.
When this market value does not exist, it is appropriate to take the best valuation.
possible, namely a value defined according to the comparable method or according to a model that
uses the discounting of future cash flows. In any case, whether this fair value is
marketed or estimated, it expresses a financial viewpoint in an exchange logic.

"Fair value" is not defined in French accounting regulations and

notably Moroccan regulation. The PCG/PCGE refers to the current value
(market value in the inventory), to the value of use or utility, to the acquisition cost, to the cost of
production.
This Anglo-Saxon concept was, until now, opposed to the fundamental principles of accounting.
French and Moroccan: the historical cost and the principle of prudence.

[Link]

Practical case:
Example of a reservoir

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value of Method
the elements elements lifespan depreciation

PVC pipe 26857,4 20 years linear

AC driving 41139.6 20 years linear

Faucet Valve 7240 20 years linear

Regard 31500 20 years linear

Fire hydrant 5000 10 years linear

TOTAL 111737

Table of Technical Installations:

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nature in the name of the prizes the price The depreciation rate net value
the unit units historical history of amortization ent of amortization
designationDiameter masterpiece masterpiece unitary global ment (%) accountant lying

meter
linear
110 (ML) 119,00 98,00 11662,00 5 4081.70 7580.30

meter
driving in linear
PVC 90 (ML) 97.00 56.00 5432,00 5 1901.20 3530.80

meter
linear
100 (ML) 80,00 134.00 10720,00 5 3752,00 6968.00

meter
driving in linear
AC 150 (ML) 42.00 310.00 13020,00 5 4557.00 8463,00

meter
linear
60 (ML) 64.00 91.40 5849.60 5 2047.36 3802.24

60 unity 1.00 660.00 660.00 5 231.00 429,00

faucet
valve 100 unit 1.00 1700,00 1700,00 5 595.00 1105.00

80 unit 3.00 1150,00 3450.00 5 1207,50 2242.50

regard unit 5.00 4300.00 21500,00 5 7525,00 13975,00

mouth
fire 100 unit 1.00 3000.00 3000.00 10 2100.00 900.00

Table of revaluations of technical installations:

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(1) 3 (4) (5)

the price (2) value deviation on Coefficient (6) (7) (8)
history Networth brute on the values of The fair Amortization Deviation of
global of market depreciation brutes reassessment value reassessed reevaluation
(3)-(1) (3)/(1) (2)*(5) (3)-(6) (6)-(2)
designationDiameter
driving 110 11662.00 7580.30 12747,28 1085,28 1.09 8286 4461.55 705.43
in PVC 90 5432,00 3530,80 6775,45 1343,45 1.25 4404 2371.41 873.24
100 10720,00 6968,00 14258.40 3538.40 1.33 9268 4990.44 2299.96
driving
in AC 150 13020.00 8463,00 20993,70 7973,70 1.61 13646 7347.80 5182.91
60 5849,60 3802.24 5484,80 -364.80 0.94 3565 1919.68 -237.12
60 660.00 429.00 1000,00 340,00 1.52 650 350,00 221,00
tap
valve 100 1700.00 1105.00 1500,00 -200,00 0.88 975 525.00 -130.00
80 3450.00 2242.50 3900.00 450,00 1.13 2535 1365,00 292,50
regard 21500,00 13975,00 22500,00 1000,00 1.05 14625 7875,00 650,00
mouth
fire 100 3000,00 900.00 4700,00 1700,00 1.57 1410 3290,00 510,00
total 76993,60 48995,84 93859,63 16866,03 59363.76 34495,87 10367.92

Proof of calculation:
The gross value on the market is an external data point;
The revaluation coefficient = market value / historical value;
The fair value = net book value * revaluation coefficient;
The revalued depreciation = the accounting depreciation * the revaluation coefficient;
The revaluation surplus = fair value - carrying amount.

1) The advantages of fair value:

She avoids back-and-forths in the market regarding the transfer of securities.
placement which aligns with the position of the Tax Authority, which taxes capital gains.

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Better reflect economic values to better enhance the communicated information

to investors and/or regulatory authorities (comparability).
Empirical tests confirm, but also refute, this hypothesis.
- Barth, Beaver, Landsman (1996): the valuation of assets (loans) and liabilities (long-term debts)
term) in 'fair value' better explains the evolution of the stock price than a
accounting at historical cost.
- Nelson (1996): no superior explanatory power of the full fair value criterion.
The full fair value limits the management (manipulation) of results (creative accounting) and
the subjective assessment of risks (strong willingness of the SEC).
Reduction of the discretionary power left to the manager to "shape" the result to
fund of the provisions policy (historical costs).
Consequently, the full fair value reflects the market evolution of the instruments.
financial players, by integrating the current economic conditions.
Improve the efficiency of the market and regulatory authorities.
Create a more binding and incentive regulatory framework in terms of decisions (a
real-time information promotes a quick and appropriate response.
By trying to align book value and market value, the use of fair value
value expands. The economic dimension takes precedence, accounting relies on
operational information. To strive for more transparency, companies are
constraints to communicate more about the management models they adopt, on
which rest their decisions. This communication must be supported as much internally
that externally and supported by a financial reporting representative of the environment
economic. It is over time that a company, through the explanation of variances,
can establish a climate of trust.

This is particularly the case with goodwill. Before the introduction of IFRS,
Goodwill was simply recorded and then amortized over varying periods.

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IFRS require companies to thoroughly break down goodwill.

in as many acquired and assumed identifiable assets and liabilities. The difficulty
mainly focuses on intangible elements (brands, customer relationships...).
The balance is then accounted for as goodwill, which is non-amortizable, but is subject to a test.
annual depreciation adjusting this asset according to its fair value. The reduction of
The value of goodwill is, furthermore, irreversible.
Shareholders thus have the opportunity to assess the relevance of the acquisitions made.
by the leaders.
2) The disadvantages of fair value:
The difficulty of assessment in the absence of an active market:

The expression 'fair value' is a very powerful expression that makes

bring out concepts of fair trade, real value, honesty, and truth.
At first glance, it seems completely justified and relevant to use fair value as
what evaluation method. However, the concept of fair value is sometimes used by the
regulators in a way that does not lead to financial information
understandable. Indeed, companies are asked to recognize their assets and their
liabilities on the balance sheet assessed at their fair value, synonymous for the IASB with market value,

even though for many of them there is none. The regulator is trying to
overcome this problem by accepting a mathematical calculation of a
hypothetical market price, determined from subjective evaluations, assumptions of
market price as if such markets existed, and based on future projections and
evaluation techniques. In fact, it turns out, and will turn out, that the fair value of
A good number of assets and liabilities must be determined based on these very criteria.
subjectives accepted by the IASB, such as stock option plans, assets
intangible assets acquired in the context of business combinations, the instruments

non-listed or listed investors on illiquid markets, pension provisions,

the impairment losses of goodwill.

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From our point of view, it is erroneous to consider these values as 'just values'.
not only for semantic reasons but also because this notion involves
the existence of active and liquid markets, of informed buyers and sellers
consents, and transactions conducted under normal market conditions and not
not values determined based on hypothetical markets with sellers and
also hypothetical buyers. In our eyes, such values, calculated according to
evaluation techniques that cannot be independently verified cannot
to be considered reliable.
Indeed, the forecasts and assumptions of management and experts are by nature
eminently subjective, whereas according to the IASB itself, for information to be
reliable, it must be neutral. This is how variations, even slight ones, in forecasts and
hypotheses may lead to very different fair value results for the same
element. The fundamental question in this context is whether these amounts
so subjective are sufficiently understandable, reliable, relevant and
comparables to be acceptable in the context of preparing financial statements.
Do users of financial statements understand how certain items are
Hypothetical and subjective? Does unreliable information have its place in the states?
financiers? The IASB recommends including assessments in the financial statements that will
often lack reliability, without having sufficiently ensured that the readers of the statements
financers should be aware of this lack of reliability.
A clear distinction should be made for the users of the financial statements.
between objective and subjective figures, between realized and unrealized gains and losses,
between those calculated based on actual market prices and those based on calculations
hypothetical.

2-Increased volatility of results based on a change in market prices (versus cost

history) :

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From the moment financial information exists and is directly related to the
economic data, we can indeed say that this information is relevant.
However, is it reliable? The fluctuations in market values are not likely to...
Do they not give an impression of volatility of financial information?
In an uncertain environment, we are seeing strong and rapid fluctuations in the
hypotheses and projections used to determine the utility value. These modifications are
translated by revaluations of asset or liability positions at the end of the period, which
leads to difficulties in evaluation and monitoring.
Moreover, from one company to another, the judgment and concerns of the leaders have a
determinant impact on the assumptions. How then to ensure comparability?
Finally, there is a security issue: by wanting to provide more and more information,
Aren't we informing the competitors too much? 'Too much information kills.'
the information
What can be done to address the shortcomings of fair value?
The answer is certainly not a return to systematic accounting at cost.
history, but perhaps lies in a return to reality and an application of the model
from the fair value limited to the assets and liabilities for which there is a market value
real and measurable, or commonly used assessment techniques integrating
observable parameters in the markets. In the absence of such values, a range of "
just values" (accompanied by assumptions and sensitivity analyses) could be
provided in the form of an annex note. It seems to us the responsibility of the IASB to
clearly define the boundary between a fair value sufficiently reliable to be
included in the basic financial statements, and a fair value for information purposes
complementary.
This is not pass the way what the IASB a chosen so far.
Ideally, as far as possible, investors should receive a
financial information coming from the same information systems and prepared on a basis

of the same principles as the information used by management to manage and measure
the performance of their company's activity. In this way, the right values

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communications to the markets would reflect the assumptions and judgments on which
rely on management decisions, instead of being based, where applicable, on
hypothetical and subjective estimates not directly related to the management of the activity of
the company.

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Fair value better reflects the economic reality of the company's assets, it
reduces the discretionary power left to the leader to 'shape' the result at will
provision policy (historical costs).

Some criticism is directed at fair value, particularly the lack of...

of objectivity and neutrality for assets that have no secondary market for
to know their true value, the reduction in reliability and comparability caused by
the use of internal assessment models, and the prohibitive cost of obtaining information.

Despite these criticisms, it remains the favored alternative for the majority at the historical cost. For this
who is the evaluation of RAMSA's assets at fair value, a certain number of
Accounting treatment is proven necessary by adjusting the values up or down.
assets, depreciation, and equity.

Certainly, we must not neglect the impact of these accounting treatments on taxation.
RAMSA.

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In conclusion, the transition to IFRS standards is not just a change of

référentiel comptable, c’est aussi l’adoption d’un système totalement différent de mesure de la
performance and communication with the markets.

Most companies will gain transparency due to, for example, the
presentation of information by segments and the recognition of derivatives at their
fair value in the balance sheet. More generally, it is a homogeneous, more detailed information and
of better quality that companies will have to provide. On the other hand, the application of these standards
will provide more transparency in terms of rating since they will allow for a much better
comparability (harmonized basis).

We believe that it is up to each leader to judge whether the adoption of IFRS can be
interesting for its company. Moreover, since 2005, unlisted companies that establish
consolidated accounts may also, if they wish, apply IFRS.
All of this could well mean that the application of IFRS to other unlisted companies
Those that establish only simple accounts could materialize in the future.
relatively close. IFRS may prove to be a really interesting opportunity for the
significant unlisted companies that think and operate in a context
international.

If international standards certainly bring more rigor and consistency,

notably in international markets, what will they really change in terms of
transparency, such a changing and relative concept? Will the deviations not be just as...
more than today?

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The questions raised by the recent stock market scandals call into question
the establishment of the reliability of accounting information. The various investment tools
known and the environment, in the broad sense, of the listed company has changed in reaction to
reassure the investors.

However, even though the law on financial security and the concepts of internal audit attempt
to eliminate issues related to so-called 'creative' accounting and other manipulations, from
Questions can still be raised about the validity and reliability of the information provided.
In the near future, thanks to new management technologies and governance
of the company, these risks should however be reduced. The development of criteria
social and environmental, by nature non-financial, raises the question of the evolution that these
criteria will be taken for the market and the shareholders.

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IAS 1: Presentation of Financial Statements

IAS 2: Stocks
IAS 7: Statement of Cash Flows
IAS 8: Net income for the period, fundamental errors and changes in
accounting methods
IAS 10: Events After the Reporting Period
IAS 11: Construction Contracts
IAS 12: Income Taxes
IAS 14: Segment Reporting
IAS 15: Information reflecting the effects of price variations
IAS 16: Property Plant and Equipment
IAS 17: Leases
IAS 18: Revenue from Ordinary Activities
IAS 19: Employee Benefits
IAS 20: Accounting for Government Grants and Disclosure of Information
Public assistance
IAS 21: Effects of Changes in Foreign Exchange Rates
IAS 22: Business Combinations
IAS 23: Borrowing Costs

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IAS 24: Information related to related parties

IAS 26: Accounting and Financial Reporting of Retirement Plans

IAS 27: Consolidated financial statements and accounting for investments in
Subsidiaries
IAS 28: Accounting for investments in associates
IAS 29: Financial Information of Hyperinflationary Economies
IAS 30: Information to be provided in the financial statements of banks and
similar financial institutions
IAS 31: Financial information related to investments in joint ventures
IAS 32: Financial instruments: disclosures and presentation
IAS 33: Earnings per Share
IAS 34: Interim Financial Reporting
IAS 35: Abandonment of Activities

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
IFRS1: First application of IFRS standards
IFRS2: Share-based payments
IFRS3: Insurance contracts
IFRS6: Exploration of mineral resources

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IAS: International Accounting Standards

designation of standards published by the IASC.

IFRS: (International Financial Reporting Standards) Committee on Interpretations of Standards

international finances.

USGAAP: American Accounting Standards

SEC:Securities & Exchange Commission (regulatory authority for financial markets, States-
Unis)

CGNC: General Accounting Standardization Code, it is a Moroccan framework that imposes

rules for the recording, evaluation, and presentation of financial accounts.

IASC: (International Accounting Standards Committee) Accounting Standards Committee

international. This organization is responsible for promoting the emergence of accounting rules
globals.

IASB : (International Accounting Standards Board) Board of Accounting Standards

It is the executive committee of the IASB;

FASB: Financial Accounting Standards Board In the United States, accounting standards are
set by theFinancial Accounting Standards Board(FASB) bringing together 4 members of the
accounting profession and 3 people from the business world, the public service, or the
university environment. This committee has defined a standard for financial statements containing the elements
following: abalance, an account ofresulta table of variation of theequity, a painting
offlow oftreasury, an appendix.

IFRIC: International Financial Reporting Interpretation Committee

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Interpretation of international financial reporting standards.

NGC: General Accounting Standards. It is a Moroccan standard applicable to all entities.

economic in order to extract relevant economic and financial information and
reliable.

Goodwill: Difference between the purchase price of a company and its net book value.
Consequently, goodwill can be positive or negative (in the case where the value of this difference is
negative, we then speak of Badwill.

Net Book Value: The net book value of an asset is the gross value reduced by the
cumulative depreciation and impairments.

Current value: The current value of an asset is the highest value between its market value and
the value of use.

Market value Amount that could be obtained from the sale (or that would be due for
the acquisition of a financial instrument on an active market

Entry cost: The cost of a fixed asset consists of:

its purchase price;

of all directly attributable costs;

decommissioning costs (if applicable);

borrowing costs.

Recoverable amount: The higher value between the net selling price of an asset and its value.
of utility.

RAMSA: Autonomous Multi-Service Management of Agadir.

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WEBSITE:
[Link]
[Link]
[Link]
[Link]
[Link]
[Link]

Bibliographique :

IAS/IFRS Standards: What should be done? How to proceed? Author: working group
of the national association of Financial Directors and Management Control, second
2004 draw, organization edition.

Memories and report:

IAS SKS thesis: 'the impact of the transition to international accounting standards'
on financial communication

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