In this article, Audit Firms in Dubai will touch various amendments and changes that audit firms in Dubai & UAE should be aware of. While we are in 2021, yet the IFRS standards and amendments became effective on January 1st 2018, if you handle the closing of your 2018 financial statements, then this guide will come in handy. Keep in mind, we shall summarize IFRS changes starting from 2018.
Read also: IFRS Updates and Changes Audit Firms in Dubai Should Be Aware Of
IFRS 9 New Financial Instruments Standard Applies Fully
If you are an audit services in Dubai & UAE and you postponed using IFRS 9 till the last second, then this is the perfect time to start implementing it. Note, that standard IAS 39 does not apply anymore and audit experts must prepare all financial statements for the year ended December 31 2018 under IFRS 9
IFRS 9 is a complicated standard and thus it’s an important concept for companies in Dubai & UAE to familiarize with, especially the new guidelines for bad debt provisions associated with trade receivables.
1. IFRS 15 New Standard on Revenue From Contracts with Clients Applies Fully
As if the implementation of IFRS 9 isn’t sufficient, Dubai audit specialists should execute IFRS 15 fully too.
Amendment of Share-based Payment Under IFRS 2
The IFRS 2 standard was amended by the clarifications associated with measurement and classification of some shared-based payment transactions. To be specific:
IFRS 2 features the accounting requirements associated with treatment of non-vesting and vesting conditions in cash-settled share-based payment transactions. The instructions on share-based payment transactions with a net settlement for withholding tax obligations was included.
Moreover, the standard comes with new accounting guidelines for adjusting share-based payment transactions from cash-settled to equity-settled. Audit services in Dubai & UAE are expected to apply these amendments prospectively.
2. IFRS 4 Amendment for Insurance Contracts
Two new standards: IFRS 17 Insurance Contracts and IFRS 9 Financial Instruments have various effective dates and this could create inconsistencies and issues with reporting by insurance providers. So, audit experts should leverage this amendment to get rid of these issues by implementing two options for the issuers of insurance contracts.
3. IAS 28 Amendments for Investments in Associates and Joint Ventures
More clarification can be found in IAS 28. If a Dubai company is a venture capital or similar entity, it can opt to measure the investment in associate or joint venture at fair value through profit/loss according to IFRS 9. (there is no equity method). According to the amendment, this option is available on investment by investment basis based on the initial recognition.
4. IAS 40 Amendment on Investment Property
The changes on this standard became effect from July 1st 2018. The amendment stipulated guidelines on transfers of a property from investment property. Keep in mind, transfer can only be possible if there is evidence of change in use. But, the change in intentions of the management for the use of property is not recognized as evidence of change of use.
5. IFRS 16 New Lease Becomes Effective
The IFRS 16 new standard guidelines is perhaps the most significant change with considerable effect on financial statements as well as the amount of work financial audit professionals need to do to make it happen. IAS 17 leases no longer applies.
So, it is important for audit services in Dubai & UAE to start revising lease contracts to determine if there is a lease or not. If a lessee is a some operating leases, then it’s important to begin to recognize lease liability and right of use asset rather than to book payments in profit/loss.
6. IAS 19 Amendment to Employee Benefits
This amendment is associated with defined benefit plan changes like settlement, curtailment, and plan amendment. These changes require internal audit specialists to remeasure defined benefit plan liability.
Nonetheless, IAS 19 update states that audit services should leverage the same assumptions for determining current service cost and the net interest for the period after the adjustments as used for the initial assumptions. Moreover, the update clarifies the impact of settlement, curtailment, and amendment (plan changes) on asset ceiling.
7. IFRS 3 Changes on Business Combinations and Joint Operations of IFRS 11
These two amendments are related and highlight the changes in a group composition. If a Dubai company secures control of another company that was joint operation, such as joint operation becomes subsidiary. A such, the parent company remeasures held interest in the subsidiary. If a company secures joint control of another firm that is a joint operation, then previously held interest cannot be remeasured in the joint operation.
Are You Looking For Help In Understanding The New IFRS Changes and Updates?
If you are located in Dubai or anywhere in UAE, and would love to work with professional Audit firms in Dubai, get in touch with Audit Firm In Dubai. visit our website for more information.
Kasun Liyanage is an Audit Manager with over 7 years of experience dealing with diversified corporate clients. He not only manages the team’s work schedule but also is an expert in handling audit areas such as external audits and fraud investigation, Internal control benchmarking and best practices and well as preparation of financial statements and IFRS compliance.
