Across sectors, financial reporting standards serve as the foundation for clear and accurate financial reporting. Financial reporting in the UAE
Across sectors, financial reporting standards serve as the foundation for clear and accurate financial reporting. Financial reporting in the UAE is based on International Financial Reporting Standards (IFRS). They ensure that highly sensitive information in the form of financial reports are presented on a consistent, clear and transparent basis, making it easier for stakeholders, investors and regulators to assess a company’s own financial status. Training on data until October 2023At, Prateek Tosniwal we provide a streamlined solution to financial management and accounting consultations to keep the UAE businesses in-line with the financial reporting format of the related authorities.
This article explains the financial reporting standards in the UAE and the integral aspects of financial reports prepared under IFRS.
What is IFRS?
The world accepted International Financial Reporting Standards (IFRS) as a fiscal reporting structure united by a majority of organizations in the UAE. These standardize financial reporting and help companies compare across borders. For all firms, including those owned by the government in the UAE, IFRS is a fundamental building block of business within the country.
IFRS is a globally recognized standard that allows companies people and organizations to ensure transparency, consistency, and international compatibility of these financial statements. Such firms also typically have an easier time attracting investors and building trust with creditors, lenders, and other stakeholders.
UAE Financial Reporting Under IFRS
External stakeholders like investors, lenders, and regulatory agencies depend on the financial reporting process to assess company performance. The significant financial statements prepared as per IFRS standards are as follows in the UAE:
So what is a Statement of Financial Position (Balance Sheet)?
This report details the company’s assets, liabilities and shareholders’ equity at a particular time. It provides a snapshot of a company’s financial condition, showing what the company owns and owes. Having a healthy balance sheet indicates a company that is well-managed and financially sound.
A Statement of Comprehensive Income (Income Statement)
This statement details the company’s revenues, expenses, and profitability over a defined timeframe. It underscores how efficient the company was operating, as well as how well it performed financially. Such information is used by investors and other stakeholders to gauge the growth potential of the company.
Proof of Changes in Equity
The statement of changes in equity explains the changes in the company’s equity over the period. It reflects contributions from and distributions to shareholders and profits not distributed to shareholders and retained or reinvested in the business.
Statement of Cash Flows
Cash flow statement: A report that shows how cash moves in and out of the business over a period of time. You are based on data until the month of October in 2023. This statement allows businesses to assess how efficiently they generate cash to support operations, repay debts, and invest for future growth.
Additional Reports Under IFRS
Along with the financial statements, companies are required to prepare additional reports for compliance with IFRS and to give a fuller picture of financial health:
Reports from the Directors’ Boards
Such reports provide a snapshot of the company’s business, flag any risks and uncertainties, and convey the company’s plans for the future. They provide stakeholders with assurance on how the management is governing the company and the management’s outlook.
You are getting MD&A, or Management Discussion & Analysis
The report offers a comprehensive overview of the financial health of the company, covering its revenues, profitability, and critical operational indicators. It explains how financial results are achieved, which is vital for investors and stakeholders who want to know what drives the company’s business strategy.
Audit Report
The audit report is prepared by an external auditor and presents an independent opinion that the financial statements conform to the IFoRs. This gives an additional assurance of the credibility of the financial statements, as they truly reflect the financial performance of the company.
Conclusion
Financial reporting standards are crucial in the UAE to promote transparency, accuracy and consistency in financial disclosures of a company. We specialize in IFRS accounting consultations, tailored to the specific statutes of the local statutes, for your business to stay on track and simplify your local business.
Following IFRS standards will enhance businesses credibility, attract investments and ultimately lead to better decision making for the growth of beusiness in a competitive environment like UAE. Reach out to Prateek Tosniwal now for expert advice on financial reporting and IFRS compliance.
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