Capital Expenditure Approval and Asset Commissioning Controls in the UAE

Capital expenditure can pass through budgeting, procurement, projects, operations and accounting before one asset appears in the ledger. A UAE business needs one controlled path from the original investment decision to commissioning and post-investment review so that spending, asset records and management expectations remain connected.

Define the decision before requesting approval

Start with the operating problem, available alternatives, expected capacity or service benefit, total cash requirement, implementation timing and responsible owner. Separate required replacement expenditure from growth projects and discretionary upgrades. The approval paper should state the assumptions and decision criteria rather than presenting only a supplier quotation.

Set authority before commitment

Use approval limits that distinguish budget approval, purchase approval, contract signature, payment release and accounting classification. A budget allocation does not automatically authorise a specific supplier commitment. Record scope changes and cost overruns through the same controlled route instead of allowing the original approval to cover an undefined expansion.

Track the project from purchase to readiness

Assign a project or asset-under-construction code to invoices, deposits, freight, installation and other attributable costs. IAS 16 explains that property, plant and equipment is initially measured at cost and includes directly attributable expenditure needed to bring an asset to the location and condition required for its intended operation. Keep operating, training, repair and abnormal costs separately reviewable rather than capitalising them automatically.

Use a commissioning certificate

Operations, the project owner and finance should agree when the asset is installed, tested, accepted and available for use. Record the commissioning date, location, custodian, serial or internal tag, final cost, unresolved defects and warranty details. This date supports the handoff from project tracking to the fixed-asset register and the start of depreciation under the applicable policy.

Reconcile commitments, invoices and payments

Compare approved value, purchase orders, supplier invoices, payments, open commitments and final capitalised cost. Investigate duplicate invoices, unapproved variations, unused deposits and costs posted to the wrong project. Close the project code only after open items are resolved and the final asset record agrees to the ledger.

Review benefits after implementation

At a defined interval, compare actual utilisation, capacity, savings, revenue or risk reduction with the approved case. Explain differences in timing, scope and benefits. A post-investment review should improve future assumptions and decision quality; it should not rewrite the original business case after the outcome is known.

Capex control checklist

1. Document the need, alternatives and decision assumptions. 2. Confirm budget, authority and funding before commitment. 3. Track purchase and project costs under controlled codes. 4. Approve scope changes and overruns explicitly. 5. Record installation, testing and the ready-for-use date. 6. Reconcile the final cost to the ledger and asset register. 7. Complete a post-investment review against the approved case.

This is an operational-finance guide. Asset recognition, useful lives, component accounting, impairment and tax treatment depend on the facts and applicable reporting requirements.

About the author

Haris Arif is Head of Finance and Investment. He is a finance and investment leader with experience across multi-entity businesses in technology, F&B and hospitality. He writes practical insights on financial control, management reporting, working capital, tax readiness and finance transformation for UAE founders, CFOs, investors and management teams.

Connect with Haris Arif on LinkedIn: https://www.linkedin.com/in/harisarifofficial/