Work in Progress Accounting for UAE Projects: Month-End Checklist

Work in progress is not a parking account for unresolved project differences. It is a controlled accounting estimate or classification supported by the entity's reporting policy, contract terms and delivery evidence. Weak WIP schedules can hide late billing, missing costs, disputed work and margin deterioration.

What belongs in the WIP review population? Begin with every open project, not only projects that already carry a WIP balance. Include projects with activity but no billing, billing ahead of recorded delivery, costs without revenue, old unbilled balances, material manual journals, negative WIP and recently completed projects that remain open.

The register should show project code, customer, contract value, approved changes, start and expected completion dates, project owner, billing position, cost to date, estimate to complete, accounting balance, tax-review status and latest evidence date. Reconcile the register total to the general ledger.

Which evidence supports project progress? Evidence can include approved milestones, delivery reports, timesheets, quantity records, customer acceptance, completion certificates, site records, system usage and other contract-specific proof. Finance should understand who produced the evidence, its reporting date and whether a dispute or approval condition remains.

A project manager's percentage without supporting detail is not enough for a material estimate. Use a method that can be reproduced and applied consistently. Document changes in method or judgement and obtain appropriate technical review where the reporting framework requires it.

How should cost-to-complete be challenged? Compare the remaining budget with open purchase orders, subcontractor commitments, staffing plans, material quantities, rework, penalties, mobilisation or demobilisation, and unresolved scope. Ask whether known cost overruns have been included and whether savings are approved or merely hoped for.

Preserve the prior forecast so movement can be explained. Large late-stage reductions in cost-to-complete or increases in expected recovery deserve independent review. A forecast should reflect current evidence, not the margin originally promised.

How should billing differences be handled? Reconcile delivered work, accounting treatment, invoice status and customer acceptance. Unbilled work needs an expected billing date and responsible owner. Billing ahead of delivery may require a separate accounting assessment. Retentions, advances, disputed invoices and credit notes should be visible rather than netted into one unexplained amount.

Review the FTA's current tax-invoice and VAT guidance separately. Accounting progress, contractual entitlement, invoicing and VAT timing are related operationally but are not automatically identical.

WIP month-end checklist Freeze the project population; update contract and variation values; obtain progress evidence; confirm cost completeness; challenge cost-to-complete; reconcile invoices and collections; identify advances and retentions; inspect disputes and post-close credit notes; calculate the project balance; compare with prior month; age open items; obtain project-owner confirmation; complete finance review; reconcile to the ledger; approve journals; and document the expected resolution.

The UAE Commercial Companies Law and tax record-keeping rules reinforce the need for retrievable accounting evidence. FTA Corporate Tax guidance states that relevant records should support transactions, assets and liabilities and be retained for the applicable period. A WIP file should therefore show how each reported balance was derived.

Which exceptions should management see? Escalate old unbilled work, negative balances, projects without current evidence, disputed milestones, cost overruns, unsupported forecast changes, completion dates repeatedly extended and balances that remain after project closure. Show the value, reason, owner and next decision date.

Use ageing based on the underlying event, not merely the journal posting date. A balance recreated each month can appear new in the ledger while representing an old unresolved commercial issue.

How should completed projects be closed? Confirm final delivery, final costs, supplier claims, customer billing, retention status, credit notes, remaining commitments and the accounting disposition of every balance. Close the project code to new routine postings and require controlled approval for late adjustments.

Perform a post-project review comparing original budget, final outcome and major forecast changes. Feed lessons into estimating, contracting, procurement and delivery controls. WIP quality improves when recurring causes are corrected upstream.

Professional boundary This checklist does not determine revenue recognition, asset classification, recoverability, provision measurement, VAT treatment or legal entitlement. Those conclusions depend on the applicable accounting framework, contract, evidence and current law. Obtain fact-specific professional advice for material or unusual projects.