It is essential for small businesses in Dubai to comply with International Financial Reporting Standards (IFRS). However, preparing financial statements in accordance with IFRS is often a complex task for corporations. Thus, it is advisable for businesses to seek the services of accredited audit firms in Dubai to seamlessly implement IFRS standards and stay compliant.
What are International Financial Reporting Standards (IFRS)?
IFRS is a set of accounting rules designed to provide transparency and consistency in financial reporting across different countries and industries. These standards help to ensure that financial statements are accurate, reliable, and comparable, thereby enhancing the credibility of a business's financial information.
Framework for Financial Reporting
In the UAE, enterprises operating in free zones are required to prepare their yearly financial accounts in accordance with IFRS. All other UAE corporations and partnerships limited by shares, entitled to any other liabilities, are permitted to prepare their accounting records in accordance with any generally recognized structure, however, the majority of the units comply with IFRS standards. The accounting records of listed firms with subsidiaries that are incorporated in other jurisdictions may be prepared in accordance with the organizational structure used by the parent company.
Audit Criteria for Registered Companies in Dubai
The following businesses must undergo an audit in the UAE at any point throughout the fiscal year if they are:
- Partnerships or affiliations with share capital;
- Corporations with limited liability
- Joint-stock businesses
- Other corporation which is mandatory by any other legislation
An Auditor's Objective for Dubai Businesses
Whether the data presented in the financial statements disclose a genuine and accurate assessment of the operations of that corporation or not, the general purpose of an audit is to produce an unbiased and independent judgment on that information. The auditors will, for instance, demonstrate and express their view regarding whether or not the reported incomes, payments, profit/loss, assets, liabilities, and equities are stated at their reasonable and accurate standards or whether there is any serious error.
Read more: Top Issues Audit Firms in Dubai Experience When Implementing IFRS 16 Leases
Notable Set of Reports for Financial Statements
A series of reports, including a balance sheet, a retention earnings statement, a cash flow statement, and an income statement, must be released for the overall objective of the yearly financial statements.
Statement of Financial Position
Prior to substantial changes to IAS 1, this statement was known simply as "balance sheet," but it was given a new name.
IAS 1 mandates the preparation of a classified statement of financial position that separates current assets from current liabilities. The asset or obligation is essentially considered current when it is anticipated to be reclaimed or resolved within 12 months of the completion of the reporting period.
Statement of Cash Flows
This report indicates how cash has been utilized by the business over a specific time period, such as an accounting year. There are many financial notes included.
Financial Statement
It includes a corporation’s obligations, liabilities, and equities, providing a thorough analysis of the company’s capital structure. This crucial financial statement includes, among other things, a cash flow report for the business.
Read more: Financial Statement Audit Overview
Shareholders Equity Statement
This particular reporting category gives details on the actions affecting equity accounts over a given time frame. A complete report will include information on the transactions and dividends involved.
The disclosure of changes in equity must at the very least include the following information:
- Reconciling each equity component's carrying amount between its starting point and ending periods
- Total comprehensive income for the period, broken down into amounts attributed to the parent’s owners and non-controlling interests
- For every equity component, the impact of retroactive application or restatement (if applicable)
Income Statement
This report includes details such as a firm’s income and expenditure for the entire year. It provides comprehensive details regarding the business’s operations.
The aforementioned reports are typically included in the yearly financial statements for Dubai-based enterprises together with additional financial comments and analysis for a particular accounting period.
Avail the services of top Audit Firms in Dubai, UAE
All businesses operating in the UAE are required to adhere to the IFRS standards. Essentially, corporate ethics and fairness should always be ensured upon business conduct, and the firm's accounting must be conducted ethically. Thus, it is advisable for businesses to seek the services of accredited top audit firms in Dubai to seamlessly implement IFRS standards and stay compliant.
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.
