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2015-01-01

Circular No. 105 Revenue Recognition from Fees and Commissions

The Palestine Monetary Authority issued Circular No. 105/2015 to mandate that banks recognize fees and commissions as revenue upon service provision or completion of a significant act, aligning with International Accounting Standard No. 18. Banks must analyze and classify fees collected between July 1 and December 31, 2015, separating deferred amounts from earned revenue, while fully automating their accounting system updates by January 1, 2016. The Authority will enforce compliance through supervisory measures, including the potential rejection of year-end financial statements for institutions that fail to apply these international standards.

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Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Circular No. (105/2015)

To All Banks Operating in Palestine

Date: Wednesday, 02 September, 2015

Subject: Revenue Recognition from Fees and Commissions

Based on Circular No. (2015/79) dated 19/5/2015 regarding the implementation of International Accounting Standard No. 18 (Revenue), and pursuant to the provisions of Article No. (46) of the Banks Law No. (9) of 2010 concerning the preparation of financial statements based on relevant international accounting standards, and following meetings held with banks in coordination with the Palestinian Banks Association and the observations raised by the banks.

Regarding Implementation Mechanisms, the following has been decided:

  1. Recognition of fees and commissions related to exceeding the current account debit limit, current account statements, and installment deferrals as revenue upon service provision.

  2. Recognition of the remaining fees and commissions listed in the guideline list attached to Circular No. (2015/79) in accordance with the circular's requirements.

  3. Banks facing difficulty in modifying their accounting systems and requiring time to comply with the requirements of Circular No. (2015/79) automatically shall work on analyzing and enumerating fees and commissions collected from 1/7/2015 to 31/12/2015, and classifying them to distinguish between fees and commissions that constitute part of the effective yield on financial statements on the one hand, and fees and commissions that are earned upon service provision and fees and commissions that are earned upon the completion of a significant act (such as the completion of a banking transaction), so that fees and commissions that should be deferred to subsequent years are excluded from the financial statements as of 31/12/2015 and collected during the period from (1/7/2015 to 31/12/2015).

  4. Banks are granted a final deadline to modify their accounting systems, with a maximum of 31/12/2015, so that from 1/1/2016, the recording and recognition of fees and commissions will be aligned with the requirements of Standard No. (18) automatically.

The Palestine Monetary Authority will take supervisory measures against banks that fail to comply with the requirements of this circular, which may include not approving the final financial statements of these banks as of 31/12/2015 if they are prepared in a manner inconsistent with international standards.

Supervision and Inspection Department
Palestine Monetary Authority

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