IFRS Advisory Services

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IFRS Advisory Services in Dubai, UAE

IFRS (International Financial Reporting Standards) Advisory Services in the UAE are professional services that assist businesses in complying with the IFRS standards for financial reporting. IFRS is a globally accepted set of accounting standards that aim to promote transparency and consistency in financial reporting. In the UAE, companies that are listed on the stock exchange are required to comply with IFRS, while other companies may choose to adopt IFRS for enhanced financial reporting credibility .

IFRS Advisory Services in the UAE typically include :

  • IFRS readiness assessments to identify gaps between existing financial reporting practices and IFRS requirements .
  • Development of an implementation plan for IFRS adoption, including timelines and resource requirements.
  • Training and education for finance personnel on IFRS requirements and implementation best practices.
  • Assistance with IFRS conversions, including financial statement preparation and conversion adjustments.
  • Ongoing support and guidance to ensure ongoing compliance with IFRS requirements.

Impact analysis of new/revised IFRS standards acceptance and implementation.

Adopting and implementing new or amended IFRS standards in the UAE can have a considerable impact, depending on a variety of criteria such as the individual standard being implemented, the industry in which it is being implemented, and the size and complexity of the company. Consider the following hypothetical consequences:

1. Financial reporting: Adoption of new or amended IFRS standards may need changes to organizations' financial reporting procedures in order to meet the new requirements. This might lead to changes in the presentation and classification of financial data, affecting the comparability of financial statements over time. Increased financial statement depth and transparency may assist investors and other stakeholders by offering a clearer view of a company's financial performance and situation.

2. Increased complexity: Some new or amended IFRS standards may bring more complicated accounting procedures or demand major modifications to existing accounting practices, thus increasing compliance costs and effort. Implementation of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers, for example, may need considerable modifications to financial institutions' and other enterprises' accounting rules and procedures.

3. Increased compliance costs: Adoption and implementation of new or amended IFRS standards may need more training and resources to assure compliance, thus increasing compliance costs. Companies, for example, may need to engage more employees or consultants to apply the new standards or adopt new accounting rules and processes.

4. Adoption of new or amended IFRS standards may influence important financial ratios such as profits per share, return on assets, and debt-to-equity ratio, which may affect the impression of a company's financial performance. This might affect a company's capacity to get cash or negotiate favorable terms with lenders or investors.

IFRS 15 - Revenue from client contracts

IFRS 15 is an international accounting standard that outlines the principles for recognizing revenue from contracts with customers. The standard applies to all contracts with customers, except for leases, insurance contracts, and financial instruments.

Under IFRS 15, revenue should be recognized when a customer obtains control of the goods or services being provided. The standard provides a five-step model for recognizing revenue:

  • IFRS 15 is a global accounting standard that describes the procedures for recognizing revenue from customer contracts.
  • Except for leases, insurance contracts, and financial instruments, the norm applies to all contracts with consumers.
  • When a client gains control of the products or services being given, revenue should be recorded.
  • IFRS 15 specifies a five-step approach for recognizing revenue, which includes identifying the contract, performance responsibilities, transaction price, transaction price distribution, and recognizing revenue when performance obligations are met.
  • Companies must present more thorough and open information about revenue recognition in their financial statements under the new standard.
  • Companies in industries that rely largely on client contracts, such as construction, telecommunications, and software development, may be most affected by the standard.

IFRS 16 – Leases

IFRS 16 is a new accounting standard that was released in January 2016 by the International Accounting Standards Board (IASB). It supersedes IAS 17, and it establishes the standards for the recognition, measurement, presentation, and disclosure of leases for both lessees and lessors.

Lessees must account for all leases on their balance sheet as a right-of-use asset and a lease liability under IFRS 16. This means that lessees will no longer be able to categorize leases as operational leases, and that all leases would be classified as finance leases.

For lessees, the main consequence of IFRS 16 is that it will dramatically increase the number of assets and liabilities on their balance sheet. This can have an impact on financial ratios like leverage and interest cover, which can impact a company's capacity to borrow or acquire financing.

IFRS 16 also adds additional disclosure obligations for both lessees and lessors, with the goal of providing more information about an entity's leasing activity.

IFRS 9 – Financial Instruments

IFRS 9 is an accounting standard that sets out the principles for the recognition, measurement, presentation and disclosure of financial instruments. It was issued by the International Accounting Standards Board (IASB) in July 2014 and became effective for annual periods beginning on or after January 1, 2018.

  • financial assets at fair value through profit or loss ,
  • financial assets measured at amortized cost, and
  • financial assets measured at fair value through other comprehensive income.

The classification depends on the nature and purpose of the financial instrument and the company's business model for managing its financial instruments. The standard also includes guidance on the measurement and impairment of financial assets and liabilities, as well as the derecognition of financial instruments .

IFRS 9 introduces a new expected credit loss model for the impairment of financial assets. This model requires companies to recognize expected credit losses on their financial assets, which may result in earlier recognition of impairment losses compared to the previous incurred loss model.

IFRS 17- Insurance Contracts

IFRS 17 is an accounting standard that sets out the principles for the recognition, measurement, presentation and disclosure of insurance contracts. It requires insurance liabilities to be measured at the present value of estimated future cash flows, using a current value approach. The standard also requires the recognition and measurement of the contractual service margin, which represents the unearned profit in the insurance contract. The implementation of IFRS 17 can be complex and time-consuming, but it aims to provide a more transparent and consistent approach to the accounting for insurance contracts, improving comparability between companies and enhancing the understanding of investors and stakeholders.